Correlation Between InPlay Oil and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Virtu Financial, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Virtu Financial.
Diversification Opportunities for InPlay Oil and Virtu Financial
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InPlay and Virtu is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Virtu Financial go up and down completely randomly.
Pair Corralation between InPlay Oil and Virtu Financial
Assuming the 90 days trading horizon InPlay Oil is expected to generate 1.05 times less return on investment than Virtu Financial. In addition to that, InPlay Oil is 1.81 times more volatile than Virtu Financial. It trades about 0.1 of its total potential returns per unit of risk. Virtu Financial is currently generating about 0.19 per unit of volatility. If you would invest 3,480 in Virtu Financial on October 28, 2024 and sell it today you would earn a total of 240.00 from holding Virtu Financial or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Virtu Financial
Performance |
| Timeline |
| InPlay Oil Corp |
| Virtu Financial |
InPlay Oil and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Virtu Financial
The main advantage of trading using opposite InPlay Oil and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.The idea behind InPlay Oil Corp and Virtu Financial 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.| Virtu Financial vs. Morgan Stanley | Virtu Financial vs. Superior Plus Corp | Virtu Financial vs. Origin Agritech | Virtu Financial vs. Identiv |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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