Correlation Between Air Industries and VirTra

Can any of the company-specific risk be diversified away by investing in both Air Industries and VirTra 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 Air Industries and VirTra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Industries Group and VirTra Inc, you can compare the effects of market volatilities on Air Industries and VirTra 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 Air Industries with a short position of VirTra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Industries and VirTra.

Diversification Opportunities for Air Industries and VirTra

-0.69

Correlation Coefficient

Air Industries  VirTra

Excellent diversification

The 3 months correlation between Air and VirTra is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Industries Group and VirTra Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirTra Inc and Air Industries 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 Air Industries Group are associated (or correlated) with VirTra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirTra Inc has no effect on the direction of Air Industries i.e., Air Industries and VirTra go up and down completely randomly.

Pair Corralation between Air Industries and VirTra

Given the investment horizon of 90 days Air Industries Group is expected to under-perform the VirTra. But the stock apears to be less risky and, when comparing its historical volatility, Air Industries Group is 1.04 times less risky than VirTra. The stock trades about -0.12 of its potential returns per unit of risk. The VirTra Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  622.00  in VirTra Inc on September 15, 2024 and sell it today you would earn a total of  70.00  from holding VirTra Inc or generate 11.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Air Industries Group  vs.  VirTra Inc

Air Industries Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Industries Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

VirTra Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VirTra Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, VirTra demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Industries and VirTra

The main advantage of trading using opposite Air Industries and VirTra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Industries position performs unexpectedly, VirTra 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 VirTra will offset losses from the drop in VirTra's long position.

The idea behind Air Industries Group and VirTra Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..