Correlation Between O I and Virco Manufacturing

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

By analyzing existing cross correlation between O I Glass and Virco Manufacturing, you can compare the effects of market volatilities on O I and Virco Manufacturing 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 O I with a short position of Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of O I and Virco Manufacturing.

Diversification Opportunities for O I and Virco Manufacturing

0.59

Correlation Coefficient

O I  Virco Manufacturing

Very weak diversification

The 3 months correlation between O I and Virco is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding O I Glass and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing and O I 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 O I Glass are associated (or correlated) with Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of O I i.e., O I and Virco Manufacturing go up and down completely randomly.

Pair Corralation between O I and Virco Manufacturing

Allowing for the 90-day total investment horizon O I Glass is expected to under-perform the Virco Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, O I Glass is 1.52 times less risky than Virco Manufacturing. The stock trades about -0.02 of its potential returns per unit of risk. The Virco Manufacturing is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  461.00  in Virco Manufacturing on September 23, 2024 and sell it today you would earn a total of  588.00  from holding Virco Manufacturing or generate 127.55% return on investment over 90 days.

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

O I Glass  vs.  Virco Manufacturing

O I Glass

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days O I Glass 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 forward 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.

Virco Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virco Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with O I and Virco Manufacturing

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

The idea behind O I Glass and Virco Manufacturing 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.