Correlation Between VF and Under Armour

Can any of the company-specific risk be diversified away by investing in both VF and Under Armour 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 VF and Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VF Corporation and Under Armour C, you can compare the effects of market volatilities on VF and Under Armour 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 VF with a short position of Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of VF and Under Armour.

Diversification Opportunities for VF and Under Armour

0.8

Correlation Coefficient

VF  Under Armour

Very poor diversification

The 3 months correlation between VF and Under is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C and VF 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 VF Corporation are associated (or correlated) with Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of VF i.e., VF and Under Armour go up and down completely randomly.

Pair Corralation between VF and Under Armour

Considering the 90-day investment horizon VF Corporation is expected to under-perform the Under Armour. In addition to that, VF is 2.28 times more volatile than Under Armour C. It trades about -0.12 of its total potential returns per unit of risk. Under Armour C is currently generating about -0.1 per unit of volatility. If you would invest  682.00  in Under Armour C on January 26, 2024 and sell it today you would lose (21.00) from holding Under Armour C or give up 3.08% of portfolio value over 90 days.

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

VF Corp.  vs.  Under Armour C

VF Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VF Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with VF and Under Armour

The main advantage of trading using opposite VF and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VF position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.

The idea behind VF Corporation and Under Armour C 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.