Correlation Between Virtu Financial and Origin Materials

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

By analyzing existing cross correlation between Virtu Financial and Origin Materials, you can compare the effects of market volatilities on Virtu Financial and Origin Materials 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 Virtu Financial with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtu Financial and Origin Materials.

Diversification Opportunities for Virtu Financial and Origin Materials

-0.7

Correlation Coefficient

Virtu Financial  Origin Materials

Excellent diversification

The 3 months correlation between Virtu and Origin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Virtu Financial and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials and Virtu Financial 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 Virtu Financial are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Virtu Financial i.e., Virtu Financial and Origin Materials go up and down completely randomly.

Pair Corralation between Virtu Financial and Origin Materials

Given the investment horizon of 90 days Virtu Financial is expected to generate 0.38 times more return on investment than Origin Materials. However, Virtu Financial is 2.61 times less risky than Origin Materials. It trades about 0.19 of its potential returns per unit of risk. Origin Materials is currently generating about -0.04 per unit of risk. If you would invest  3,085  in Virtu Financial on September 2, 2024 and sell it today you would earn a total of  646.00  from holding Virtu Financial or generate 20.94% return on investment over 90 days.

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

Virtu Financial  vs.  Origin Materials

Virtu Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Virtu Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Virtu Financial and Origin Materials

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

The idea behind Virtu Financial and Origin Materials 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..