Correlation Between Vizio Holding and American Outdoor

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

By analyzing existing cross correlation between Vizio Holding Corp and American Outdoor Brands, you can compare the effects of market volatilities on Vizio Holding and American Outdoor 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 Vizio Holding with a short position of American Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vizio Holding and American Outdoor.

Diversification Opportunities for Vizio Holding and American Outdoor

-0.63

Correlation Coefficient

Vizio Holding  American Outdoor

Excellent diversification

The 3 months correlation between Vizio and American is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vizio Holding Corp and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Vizio Holding 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 Vizio Holding Corp are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Vizio Holding i.e., Vizio Holding and American Outdoor go up and down completely randomly.

Pair Corralation between Vizio Holding and American Outdoor

Given the investment horizon of 90 days Vizio Holding Corp is expected to generate 0.25 times more return on investment than American Outdoor. However, Vizio Holding Corp is 3.95 times less risky than American Outdoor. It trades about -0.17 of its potential returns per unit of risk. American Outdoor Brands is currently generating about -0.08 per unit of risk. If you would invest  1,098  in Vizio Holding Corp on January 26, 2024 and sell it today you would lose (19.00) from holding Vizio Holding Corp or give up 1.73% of portfolio value over 90 days.

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

Vizio Holding Corp  vs.  American Outdoor Brands

Vizio Holding Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vizio Holding Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, Vizio Holding displayed solid returns over the last few months and may actually be approaching a breakup point.

American Outdoor Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Outdoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vizio Holding and American Outdoor

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

The idea behind Vizio Holding Corp and American Outdoor Brands 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.