Correlation Between Macquarie Group and Virtu Financial

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

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

Diversification Opportunities for Macquarie Group and Virtu Financial

0.64

Correlation Coefficient

Macquarie Group  Virtu Financial

Poor diversification

The 3 months correlation between Macquarie and Virtu is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Limited and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and Macquarie Group 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 Macquarie Group Limited are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of Macquarie Group i.e., Macquarie Group and Virtu Financial go up and down completely randomly.

Pair Corralation between Macquarie Group and Virtu Financial

Assuming the 90 days horizon Macquarie Group Limited is expected to under-perform the Virtu Financial. But the stock apears to be less risky and, when comparing its historical volatility, Macquarie Group Limited is 1.2 times less risky than Virtu Financial. The stock trades about -0.13 of its potential returns per unit of risk. The Virtu Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,378  in Virtu Financial on December 22, 2024 and sell it today you would earn a total of  22.00  from holding Virtu Financial or generate 0.65% return on investment over 90 days.

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

Macquarie Group Limited  vs.  Virtu Financial

Macquarie Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macquarie Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Macquarie Group and Virtu Financial

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

The idea behind Macquarie Group Limited and Virtu Financial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.