Correlation Between Virco Manufacturing and ICU Medical
Can any of the company-specific risk be diversified away by investing in both Virco Manufacturing and ICU Medical 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 Virco Manufacturing and ICU Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virco Manufacturing and ICU Medical, you can compare the effects of market volatilities on Virco Manufacturing and ICU Medical 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 Virco Manufacturing with a short position of ICU Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virco Manufacturing and ICU Medical.
Diversification Opportunities for Virco Manufacturing and ICU Medical
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virco and ICU is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical and Virco Manufacturing 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 Virco Manufacturing are associated (or correlated) with ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Virco Manufacturing i.e., Virco Manufacturing and ICU Medical go up and down completely randomly.
Pair Corralation between Virco Manufacturing and ICU Medical
Given the investment horizon of 90 days Virco Manufacturing is expected to generate 2.08 times more return on investment than ICU Medical. However, Virco Manufacturing is 2.08 times more volatile than ICU Medical. It trades about 0.2 of its potential returns per unit of risk. ICU Medical is currently generating about -0.21 per unit of risk. If you would invest 1,412 in Virco Manufacturing on August 29, 2024 and sell it today you would earn a total of 232.00 from holding Virco Manufacturing or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virco Manufacturing vs. ICU Medical
Performance |
| Timeline |
| Virco Manufacturing |
| ICU Medical |
Virco Manufacturing and ICU Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virco Manufacturing and ICU Medical
The main advantage of trading using opposite Virco Manufacturing and ICU Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virco Manufacturing position performs unexpectedly, ICU Medical 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 ICU Medical will offset losses from the drop in ICU Medical's long position.| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
| ICU Medical vs. Femasys | ICU Medical vs. Sharps Technology Warrant | ICU Medical vs. GlucoTrack | ICU Medical vs. Walt Disney |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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