Correlation Between Regional Management and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both Regional Management 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 Regional Management and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Virtu Financial, you can compare the effects of market volatilities on Regional Management 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 Regional Management with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Virtu Financial.
Diversification Opportunities for Regional Management and Virtu Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and Virtu is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and Regional Management 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 Regional Management Corp 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 Regional Management i.e., Regional Management and Virtu Financial go up and down completely randomly.
Pair Corralation between Regional Management and Virtu Financial
Allowing for the 90-day total investment horizon Regional Management is expected to generate 2.66 times less return on investment than Virtu Financial. In addition to that, Regional Management is 1.47 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 0.4 per unit of volatility. If you would invest 3,097 in Virtu Financial on August 26, 2024 and sell it today you would earn a total of 572.00 from holding Virtu Financial or generate 18.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Virtu Financial
Performance |
| Timeline |
| Regional Management Corp |
| Virtu Financial |
Regional Management and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Virtu Financial
The main advantage of trading using opposite Regional Management and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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