Correlation Between Virtu Financial and Visa

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

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

Diversification Opportunities for Virtu Financial and Visa

0.91

Correlation Coefficient

Virtu Financial  Visa

Almost no diversification

The 3 months correlation between Virtu and Visa is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Virtu Financial and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Virtu Financial i.e., Virtu Financial and Visa go up and down completely randomly.

Pair Corralation between Virtu Financial and Visa

Assuming the 90 days horizon Virtu Financial is expected to generate 1.8 times more return on investment than Visa. However, Virtu Financial is 1.8 times more volatile than Visa Inc. It trades about 0.15 of its potential returns per unit of risk. Visa Inc is currently generating about 0.21 per unit of risk. If you would invest  3,360  in Virtu Financial on October 9, 2024 and sell it today you would earn a total of  120.00  from holding Virtu Financial or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	94.12%
Values	Daily Returns

Virtu Financial  vs.  Visa Inc

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. Despite nearly fragile basic indicators, Virtu Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Visa Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Visa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtu Financial and Visa

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

The idea behind Virtu Financial and Visa 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.