Correlation Between Virtu Financial and TDK

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

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

Diversification Opportunities for Virtu Financial and TDK

0.66

Correlation Coefficient

Virtu Financial  TDK

Poor diversification

The 3 months correlation between Virtu and TDK is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Virtu Financial and TDK Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDK Corporation 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 TDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDK Corporation has no effect on the direction of Virtu Financial i.e., Virtu Financial and TDK go up and down completely randomly.

Pair Corralation between Virtu Financial and TDK

Assuming the 90 days horizon Virtu Financial is expected to generate 1.19 times more return on investment than TDK. However, Virtu Financial is 1.19 times more volatile than TDK Corporation. It trades about 0.15 of its potential returns per unit of risk. TDK Corporation is currently generating about -0.02 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	Significant
Accuracy	94.12%
Values	Daily Returns

Virtu Financial  vs.  TDK Corp.

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.

TDK Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TDK Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TDK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Virtu Financial and TDK

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

The idea behind Virtu Financial and TDK Corporation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.