Correlation Between Virtu Financial and Sandfire Resources

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

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

Diversification Opportunities for Virtu Financial and Sandfire Resources

-0.02

Correlation Coefficient

Virtu Financial  Sandfire Resources

Good diversification

The 3 months correlation between Virtu and Sandfire is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Virtu Financial and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Virtu Financial i.e., Virtu Financial and Sandfire Resources go up and down completely randomly.

Pair Corralation between Virtu Financial and Sandfire Resources

Assuming the 90 days horizon Virtu Financial is expected to generate 9.45 times less return on investment than Sandfire Resources. But when comparing it to its historical volatility, Virtu Financial is 1.0 times less risky than Sandfire Resources. It trades about 0.02 of its potential returns per unit of risk. Sandfire Resources Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  560.00  in Sandfire Resources Limited on December 22, 2024 and sell it today you would earn a total of  105.00  from holding Sandfire Resources Limited or generate 18.75% return on investment over 90 days.

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

Virtu Financial  vs.  Sandfire Resources Limited

Virtu Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Virtu Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sandfire Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sandfire Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtu Financial and Sandfire Resources

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

The idea behind Virtu Financial and Sandfire Resources Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.