Correlation Between Coda Octopus and Vanguard

Can any of the company-specific risk be diversified away by investing in both Coda Octopus and Vanguard at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Coda Octopus and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coda Octopus Group and Vanguard SP 500, you can compare the effects of market volatilities on Coda Octopus and Vanguard and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Coda Octopus with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coda Octopus and Vanguard.

Diversification Opportunities for Coda Octopus and Vanguard

0.25

Correlation Coefficient

Coda Octopus  Vanguard

Modest diversification

The 3 months correlation between Coda and Vanguard is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and Coda Octopus is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Coda Octopus Group are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of Coda Octopus i.e., Coda Octopus and Vanguard go up and down completely randomly.

Pair Corralation between Coda Octopus and Vanguard

Given the investment horizon of 90 days Coda Octopus Group is expected to generate 3.3 times more return on investment than Vanguard. However, Coda Octopus is 3.3 times more volatile than Vanguard SP 500. It trades about 0.06 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about -0.01 per unit of risk. If you would invest  650.00  in Coda Octopus Group on February 4, 2024 and sell it today you would earn a total of  20.00  from holding Coda Octopus Group or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Coda Octopus Group  vs.  Vanguard SP 500

Coda Octopus Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

Vanguard SP 500

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Coda Octopus and Vanguard

The main advantage of trading using opposite Coda Octopus and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus position performs unexpectedly, Vanguard can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard will offset losses from the drop in Vanguard's long position.

The idea behind Coda Octopus Group and Vanguard SP 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.