Correlation Between InPlay Oil and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and Virtus Investment 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 Virtus Investment 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 Virtus Investment Partners, you can compare the effects of market volatilities on InPlay Oil and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Virtus Investment.
Diversification Opportunities for InPlay Oil and Virtus Investment
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InPlay and Virtus is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of InPlay Oil i.e., InPlay Oil and Virtus Investment go up and down completely randomly.
Pair Corralation between InPlay Oil and Virtus Investment
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Virtus Investment. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.11 times less risky than Virtus Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Virtus Investment Partners is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17,722 in Virtus Investment Partners on August 29, 2024 and sell it today you would earn a total of 5,478 from holding Virtus Investment Partners or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Virtus Investment Partners
Performance |
| Timeline |
| InPlay Oil Corp |
| Virtus Investment |
InPlay Oil and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Virtus Investment
The main advantage of trading using opposite InPlay Oil and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.| InPlay Oil vs. Diamyd Medical AB | InPlay Oil vs. MEDICAL FACILITIES NEW | InPlay Oil vs. CVR Medical Corp | InPlay Oil vs. SAFETY MEDICAL PROD |
| Virtus Investment vs. Superior Plus Corp | Virtus Investment vs. NMI Holdings | Virtus Investment vs. Origin Agritech | Virtus Investment vs. SIVERS SEMICONDUCTORS AB |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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