Correlation Between VirTra and Austal
Can any of the company-specific risk be diversified away by investing in both VirTra and Austal 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 VirTra and Austal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VirTra Inc and Austal Limited, you can compare the effects of market volatilities on VirTra and Austal 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 VirTra with a short position of Austal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VirTra and Austal.
Diversification Opportunities for VirTra and Austal
Significant diversification
The 3 months correlation between VirTra and Austal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and Austal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austal Limited and VirTra 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 VirTra Inc are associated (or correlated) with Austal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austal Limited has no effect on the direction of VirTra i.e., VirTra and Austal go up and down completely randomly.
Pair Corralation between VirTra and Austal
Given the investment horizon of 90 days VirTra Inc is expected to under-perform the Austal. In addition to that, VirTra is 1.39 times more volatile than Austal Limited. It trades about -0.02 of its total potential returns per unit of risk. Austal Limited is currently generating about 0.07 per unit of volatility. If you would invest 138.00 in Austal Limited on November 3, 2024 and sell it today you would earn a total of 87.00 from holding Austal Limited or generate 63.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
VirTra Inc vs. Austal Limited
Performance |
| Timeline |
| VirTra Inc |
| Austal Limited |
VirTra and Austal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VirTra and Austal
The main advantage of trading using opposite VirTra and Austal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VirTra position performs unexpectedly, Austal 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 Austal will offset losses from the drop in Austal's long position.| VirTra vs. Innovative Solutions and | VirTra vs. Park Electrochemical | VirTra vs. Ducommun Incorporated | VirTra vs. National Presto Industries |
| Austal vs. 808 Renewable Energy | Austal vs. Sky Harbour Group | Austal vs. VirTra Inc | Austal vs. Firan Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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