Correlation Between NEXTDC and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both NEXTDC and Virtu Financial 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 NEXTDC and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXTDC LTD and Virtu Financial, you can compare the effects of market volatilities on NEXTDC and Virtu Financial 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 NEXTDC with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXTDC and Virtu Financial.
Diversification Opportunities for NEXTDC and Virtu Financial
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NEXTDC and Virtu is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NEXTDC LTD and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and NEXTDC 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 NEXTDC LTD are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of NEXTDC i.e., NEXTDC and Virtu Financial go up and down completely randomly.
Pair Corralation between NEXTDC and Virtu Financial
Assuming the 90 days horizon NEXTDC LTD is expected to under-perform the Virtu Financial. In addition to that, NEXTDC is 1.22 times more volatile than Virtu Financial. It trades about -0.06 of its total potential returns per unit of risk. Virtu Financial is currently generating about 0.09 per unit of volatility. If you would invest 3,480 in Virtu Financial on October 12, 2024 and sell it today you would earn a total of 80.00 from holding Virtu Financial or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
NEXTDC LTD vs. Virtu Financial
Performance |
| Timeline |
| NEXTDC LTD |
| Virtu Financial |
NEXTDC and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXTDC and Virtu Financial
The main advantage of trading using opposite NEXTDC and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXTDC position performs unexpectedly, Virtu Financial 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 Virtu Financial will offset losses from the drop in Virtu Financial's long position.| NEXTDC vs. Virtu Financial | NEXTDC vs. Erste Group Bank | NEXTDC vs. Direct Line Insurance | NEXTDC vs. PTT Global Chemical |
| Virtu Financial vs. Compagnie Plastic Omnium | Virtu Financial vs. Corporate Office Properties | Virtu Financial vs. APPLIED MATERIALS | Virtu Financial vs. THRACE PLASTICS |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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