Correlation Between Virtu Financial and CARSALES
Can any of the company-specific risk be diversified away by investing in both Virtu Financial and CARSALES 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 Virtu Financial and CARSALES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtu Financial and CARSALESCOM, you can compare the effects of market volatilities on Virtu Financial and CARSALES 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 Virtu Financial with a short position of CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtu Financial and CARSALES.
Diversification Opportunities for Virtu Financial and CARSALES
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Virtu and CARSALES is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Virtu Financial and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and Virtu Financial 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 Virtu Financial are associated (or correlated) with CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Virtu Financial i.e., Virtu Financial and CARSALES go up and down completely randomly.
Pair Corralation between Virtu Financial and CARSALES
Assuming the 90 days horizon Virtu Financial is expected to generate 1.35 times more return on investment than CARSALES. However, Virtu Financial is 1.35 times more volatile than CARSALESCOM. It trades about 0.19 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.06 per unit of risk. If you would invest 1,434 in Virtu Financial on November 3, 2024 and sell it today you would earn a total of 2,366 from holding Virtu Financial or generate 164.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtu Financial vs. CARSALESCOM
Performance |
| Timeline |
| Virtu Financial |
| CARSALESCOM |
Virtu Financial and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtu Financial and CARSALES
The main advantage of trading using opposite Virtu Financial and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtu Financial position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| Virtu Financial vs. Morgan Stanley | Virtu Financial vs. Morgan Stanley | Virtu Financial vs. The Charles Schwab | Virtu Financial vs. The Goldman Sachs |
| CARSALES vs. CSSC Offshore Marine | CARSALES vs. United Rentals | CARSALES vs. US Physical Therapy | CARSALES vs. SIEM OFFSHORE NEW |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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