Correlation Between Dairy Farm and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Virtu Financial, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Virtu Financial.
Diversification Opportunities for Dairy Farm and Virtu Financial
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dairy and Virtu is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and Virtu Financial go up and down completely randomly.
Pair Corralation between Dairy Farm and Virtu Financial
Assuming the 90 days trading horizon Dairy Farm is expected to generate 10.58 times less return on investment than Virtu Financial. In addition to that, Dairy Farm is 1.17 times more volatile than Virtu Financial. It trades about 0.02 of its total potential returns per unit of risk. Virtu Financial is currently generating about 0.22 per unit of volatility. If you would invest 3,139 in Virtu Financial on November 8, 2024 and sell it today you would earn a total of 801.00 from holding Virtu Financial or generate 25.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. Virtu Financial
Performance |
| Timeline |
| Dairy Farm International |
| Virtu Financial |
Dairy Farm and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Virtu Financial
The main advantage of trading using opposite Dairy Farm and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. BRIT AMER TOBACCO | Dairy Farm vs. Summit Hotel Properties | Dairy Farm vs. Penn National Gaming | Dairy Farm vs. DETALION GAMES SA |
| Virtu Financial vs. NTT DATA | Virtu Financial vs. Laureate Education | Virtu Financial vs. Alibaba Health Information | Virtu Financial vs. DATAGROUP SE |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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