Correlation Between VirTra and Northrop Grumman
Can any of the company-specific risk be diversified away by investing in both VirTra and Northrop Grumman 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 Northrop Grumman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VirTra Inc and Northrop Grumman, you can compare the effects of market volatilities on VirTra and Northrop Grumman 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 Northrop Grumman. Check out your portfolio center. Please also check ongoing floating volatility patterns of VirTra and Northrop Grumman.
Diversification Opportunities for VirTra and Northrop Grumman
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VirTra and Northrop is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and Northrop Grumman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrop Grumman 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 Northrop Grumman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrop Grumman has no effect on the direction of VirTra i.e., VirTra and Northrop Grumman go up and down completely randomly.
Pair Corralation between VirTra and Northrop Grumman
Given the investment horizon of 90 days VirTra Inc is expected to generate 4.87 times more return on investment than Northrop Grumman. However, VirTra is 4.87 times more volatile than Northrop Grumman. It trades about 0.16 of its potential returns per unit of risk. Northrop Grumman is currently generating about -0.1 per unit of risk. If you would invest 644.00 in VirTra Inc on August 27, 2024 and sell it today you would earn a total of 127.00 from holding VirTra Inc or generate 19.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VirTra Inc vs. Northrop Grumman
Performance |
| Timeline |
| VirTra Inc |
| Northrop Grumman |
VirTra and Northrop Grumman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VirTra and Northrop Grumman
The main advantage of trading using opposite VirTra and Northrop Grumman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VirTra position performs unexpectedly, Northrop Grumman 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 Northrop Grumman will offset losses from the drop in Northrop Grumman's long position.| VirTra vs. Innovative Solutions and | VirTra vs. Park Electrochemical | VirTra vs. Ducommun Incorporated | VirTra vs. National Presto Industries |
| Northrop Grumman vs. Redwire Corp | Northrop Grumman vs. Sidus Space | Northrop Grumman vs. Rocket Lab USA | Northrop Grumman vs. Momentus |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |