Correlation Between Stonex and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both Stonex 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 Stonex and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stonex Group and Virtu Financial, you can compare the effects of market volatilities on Stonex 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 Stonex with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stonex and Virtu Financial.
Diversification Opportunities for Stonex and Virtu Financial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Stonex and Virtu is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Stonex Group and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and Stonex 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 Stonex 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 Stonex i.e., Stonex and Virtu Financial go up and down completely randomly.
Pair Corralation between Stonex and Virtu Financial
Given the investment horizon of 90 days Stonex is expected to generate 1.37 times less return on investment than Virtu Financial. But when comparing it to its historical volatility, Stonex Group is 1.02 times less risky than Virtu Financial. It trades about 0.06 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,881 in Virtu Financial on September 12, 2024 and sell it today you would earn a total of 1,770 from holding Virtu Financial or generate 94.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stonex Group vs. Virtu Financial
Performance |
| Timeline |
| Stonex Group |
| Virtu Financial |
Stonex and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stonex and Virtu Financial
The main advantage of trading using opposite Stonex and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stonex 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.| Stonex vs. PJT Partners | Stonex vs. Houlihan Lokey | Stonex vs. Stifel Financial | Stonex vs. Evercore Partners |
| Virtu Financial vs. Scully Royalty | Virtu Financial vs. Oppenheimer Holdings | Virtu Financial vs. Houlihan Lokey | Virtu Financial vs. Stonex Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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