Correlation Between Virco Manufacturing and Natuzzi SpA
Can any of the company-specific risk be diversified away by investing in both Virco Manufacturing and Natuzzi SpA 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 Natuzzi SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virco Manufacturing and Natuzzi SpA, you can compare the effects of market volatilities on Virco Manufacturing and Natuzzi SpA 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 Natuzzi SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virco Manufacturing and Natuzzi SpA.
Diversification Opportunities for Virco Manufacturing and Natuzzi SpA
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Virco and Natuzzi is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing and Natuzzi SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natuzzi SpA 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 Natuzzi SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natuzzi SpA has no effect on the direction of Virco Manufacturing i.e., Virco Manufacturing and Natuzzi SpA go up and down completely randomly.
Pair Corralation between Virco Manufacturing and Natuzzi SpA
Given the investment horizon of 90 days Virco Manufacturing is expected to generate 5.4 times less return on investment than Natuzzi SpA. But when comparing it to its historical volatility, Virco Manufacturing is 11.34 times less risky than Natuzzi SpA. It trades about 0.09 of its potential returns per unit of risk. Natuzzi SpA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 599.00 in Natuzzi SpA on August 24, 2024 and sell it today you would lose (166.00) from holding Natuzzi SpA or give up 27.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.77% |
| Values | Daily Returns |
Virco Manufacturing vs. Natuzzi SpA
Performance |
| Timeline |
| Virco Manufacturing |
| Natuzzi SpA |
Virco Manufacturing and Natuzzi SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virco Manufacturing and Natuzzi SpA
The main advantage of trading using opposite Virco Manufacturing and Natuzzi SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virco Manufacturing position performs unexpectedly, Natuzzi SpA 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 Natuzzi SpA will offset losses from the drop in Natuzzi SpA's long position.| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
| Natuzzi SpA vs. Bassett Furniture Industries | Natuzzi SpA vs. Hooker Furniture | Natuzzi SpA vs. Flexsteel Industries | Natuzzi SpA vs. Ethan Allen Interiors |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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