Correlation Between Velodyne Lidar and Alphabet

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Can any of the company-specific risk be diversified away by investing in both Velodyne Lidar and Alphabet 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 Velodyne Lidar and Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velodyne Lidar and Alphabet Cl A, you can compare the effects of market volatilities on Velodyne Lidar and Alphabet 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 Velodyne Lidar with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velodyne Lidar and Alphabet.

Diversification Opportunities for Velodyne Lidar and Alphabet

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Velodyne and Alphabet is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Velodyne Lidar and Alphabet Cl A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Cl A and Velodyne Lidar 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 Velodyne Lidar are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Cl A has no effect on the direction of Velodyne Lidar i.e., Velodyne Lidar and Alphabet go up and down completely randomly.

Pair Corralation between Velodyne Lidar and Alphabet

Given the investment horizon of 90 days Velodyne Lidar is expected to under-perform the Alphabet. In addition to that, Velodyne Lidar is 2.05 times more volatile than Alphabet Cl A. It trades about -0.12 of its total potential returns per unit of risk. Alphabet Cl A is currently generating about -0.18 per unit of volatility. If you would invest  10,681  in Alphabet Cl A on July 6, 2022 and sell it today you would lose (817.00)  from holding Alphabet Cl A or give up 7.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Velodyne Lidar  vs.  Alphabet Cl A

 Performance (%) 
       Timeline  
Velodyne Lidar 
Velodyne Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Velodyne Lidar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Velodyne Lidar reported solid returns over the last few months and may actually be approaching a breakup point.

Velodyne Price Channel

Alphabet Cl A 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively steady which may send shares a bit higher in November 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Alphabet Price Channel

Velodyne Lidar and Alphabet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Velodyne Lidar and Alphabet

The main advantage of trading using opposite Velodyne Lidar and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velodyne Lidar position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.
Velodyne Lidar vs. Amazon Inc
The idea behind Velodyne Lidar and Alphabet Cl A 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.
Alphabet vs. Tencent Holdings
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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