Correlation Between FARM 51 and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and Virtu Financial, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and Virtu Financial.
Diversification Opportunities for FARM 51 and Virtu Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARM and Virtu is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and FARM 51 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 FARM 51 GROUP 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 FARM 51 i.e., FARM 51 and Virtu Financial go up and down completely randomly.
Pair Corralation between FARM 51 and Virtu Financial
Assuming the 90 days horizon FARM 51 is expected to generate 1.32 times less return on investment than Virtu Financial. In addition to that, FARM 51 is 1.08 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 0.14 per unit of volatility. If you would invest 3,520 in Virtu Financial on November 1, 2024 and sell it today you would earn a total of 180.00 from holding Virtu Financial or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. Virtu Financial
Performance |
| Timeline |
| FARM 51 GROUP |
| Virtu Financial |
FARM 51 and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and Virtu Financial
The main advantage of trading using opposite FARM 51 and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.| FARM 51 vs. Eagle Materials | FARM 51 vs. The Yokohama Rubber | FARM 51 vs. Altair Engineering | FARM 51 vs. Delta Air Lines |
| Virtu Financial vs. Methode Electronics | Virtu Financial vs. Renesas Electronics | Virtu Financial vs. AOI Electronics Co | Virtu Financial vs. BJs Wholesale Club |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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