Correlation Between Virco Manufacturing and Pool
Can any of the company-specific risk be diversified away by investing in both Virco Manufacturing and Pool 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 Pool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virco Manufacturing and Pool Corporation, you can compare the effects of market volatilities on Virco Manufacturing and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virco Manufacturing and Pool.
Diversification Opportunities for Virco Manufacturing and Pool
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Virco and Pool is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Virco Manufacturing i.e., Virco Manufacturing and Pool go up and down completely randomly.
Pair Corralation between Virco Manufacturing and Pool
Given the investment horizon of 90 days Virco Manufacturing is expected to generate 1.83 times more return on investment than Pool. However, Virco Manufacturing is 1.83 times more volatile than Pool Corporation. It trades about 0.2 of its potential returns per unit of risk. Pool Corporation is currently generating about 0.09 per unit of risk. If you would invest 1,406 in Virco Manufacturing on August 31, 2024 and sell it today you would earn a total of 230.00 from holding Virco Manufacturing or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virco Manufacturing vs. Pool Corp.
Performance |
| Timeline |
| Virco Manufacturing |
| Pool |
Virco Manufacturing and Pool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virco Manufacturing and Pool
The main advantage of trading using opposite Virco Manufacturing and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virco Manufacturing position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool's long position.| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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