Correlation Between OBSERVE MEDICAL and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both OBSERVE MEDICAL 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 OBSERVE MEDICAL and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBSERVE MEDICAL ASA and Virtu Financial, you can compare the effects of market volatilities on OBSERVE MEDICAL 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 OBSERVE MEDICAL with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBSERVE MEDICAL and Virtu Financial.
Diversification Opportunities for OBSERVE MEDICAL and Virtu Financial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OBSERVE and Virtu is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding OBSERVE MEDICAL ASA and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and OBSERVE 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 OBSERVE MEDICAL ASA 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 OBSERVE MEDICAL i.e., OBSERVE MEDICAL and Virtu Financial go up and down completely randomly.
Pair Corralation between OBSERVE MEDICAL and Virtu Financial
Assuming the 90 days trading horizon OBSERVE MEDICAL ASA is expected to generate 16.33 times more return on investment than Virtu Financial. However, OBSERVE MEDICAL is 16.33 times more volatile than Virtu Financial. It trades about 0.06 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.08 per unit of risk. If you would invest 198.00 in OBSERVE MEDICAL ASA on October 16, 2024 and sell it today you would lose (195.22) from holding OBSERVE MEDICAL ASA or give up 98.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBSERVE MEDICAL ASA vs. Virtu Financial
Performance |
| Timeline |
| OBSERVE MEDICAL ASA |
| Virtu Financial |
OBSERVE MEDICAL and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBSERVE MEDICAL and Virtu Financial
The main advantage of trading using opposite OBSERVE MEDICAL and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBSERVE MEDICAL 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.| OBSERVE MEDICAL vs. United Insurance Holdings | OBSERVE MEDICAL vs. COREBRIDGE FINANCIAL INC | OBSERVE MEDICAL vs. Park Hotels Resorts | OBSERVE MEDICAL vs. Virtu Financial |
| Virtu Financial vs. ENVVENO MEDICAL DL 00001 | Virtu Financial vs. OBSERVE MEDICAL ASA | Virtu Financial vs. SOFI TECHNOLOGIES | Virtu Financial vs. Sunny Optical Technology |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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