Correlation Between Vanguard New and Orion Energy

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

By analyzing existing cross correlation between Vanguard New Jersey and Orion Energy Systems, you can compare the effects of market volatilities on Vanguard New and Orion Energy 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 Vanguard New with a short position of Orion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard New and Orion Energy.

Diversification Opportunities for Vanguard New and Orion Energy

-0.26

Correlation Coefficient

Vanguard New  Orion Energy

Very good diversification

The 3 months correlation between Vanguard and Orion is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard New Jersey and Orion Energy Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Energy Systems and Vanguard New 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 Vanguard New Jersey are associated (or correlated) with Orion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Energy Systems has no effect on the direction of Vanguard New i.e., Vanguard New and Orion Energy go up and down completely randomly.

Pair Corralation between Vanguard New and Orion Energy

Assuming the 90 days horizon Vanguard New Jersey is expected to generate 0.12 times more return on investment than Orion Energy. However, Vanguard New Jersey is 8.61 times less risky than Orion Energy. It trades about -0.3 of its potential returns per unit of risk. Orion Energy Systems is currently generating about -0.05 per unit of risk. If you would invest  1,140  in Vanguard New Jersey on January 24, 2024 and sell it today you would lose (15.00) from holding Vanguard New Jersey or give up 1.32% of portfolio value over 90 days.

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

Vanguard New Jersey  vs.  Orion Energy Systems

Vanguard New Jersey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard New Jersey has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Orion Energy Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orion Energy Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vanguard New and Orion Energy

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

The idea behind Vanguard New Jersey and Orion Energy Systems 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..