Correlation Between Microbot Medical and Virco Manufacturing
Can any of the company-specific risk be diversified away by investing in both Microbot Medical and Virco Manufacturing 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 Microbot Medical and Virco Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microbot Medical and Virco Manufacturing, you can compare the effects of market volatilities on Microbot Medical and Virco Manufacturing 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 Microbot Medical with a short position of Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and Virco Manufacturing.
Diversification Opportunities for Microbot Medical and Virco Manufacturing
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microbot and Virco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing and Microbot Medical 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 Microbot Medical are associated (or correlated) with Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Microbot Medical i.e., Microbot Medical and Virco Manufacturing go up and down completely randomly.
Pair Corralation between Microbot Medical and Virco Manufacturing
Given the investment horizon of 90 days Microbot Medical is expected to generate 5.68 times less return on investment than Virco Manufacturing. But when comparing it to its historical volatility, Microbot Medical is 1.37 times less risky than Virco Manufacturing. It trades about 0.05 of its potential returns per unit of risk. Virco Manufacturing is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,412 in Virco Manufacturing on August 28, 2024 and sell it today you would earn a total of 222.00 from holding Virco Manufacturing or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microbot Medical vs. Virco Manufacturing
Performance |
| Timeline |
| Microbot Medical |
| Virco Manufacturing |
Microbot Medical and Virco Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microbot Medical and Virco Manufacturing
The main advantage of trading using opposite Microbot Medical and Virco Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical position performs unexpectedly, Virco Manufacturing 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 Virco Manufacturing will offset losses from the drop in Virco Manufacturing's long position.The idea behind Microbot Medical and Virco Manufacturing 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.| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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