Correlation Between NIPPON PROLOGIS and Virtu Financial

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

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

Diversification Opportunities for NIPPON PROLOGIS and Virtu Financial

0.03

Correlation Coefficient

NIPPON PROLOGIS  Virtu Financial

Significant diversification

The 3 months correlation between NIPPON and Virtu is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON PROLOGIS REIT and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and NIPPON PROLOGIS 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 NIPPON PROLOGIS REIT 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 NIPPON PROLOGIS i.e., NIPPON PROLOGIS and Virtu Financial go up and down completely randomly.

Pair Corralation between NIPPON PROLOGIS and Virtu Financial

Assuming the 90 days trading horizon NIPPON PROLOGIS REIT is expected to generate 0.64 times more return on investment than Virtu Financial. However, NIPPON PROLOGIS REIT is 1.57 times less risky than Virtu Financial. It trades about 0.1 of its potential returns per unit of risk. Virtu Financial is currently generating about -0.01 per unit of risk. If you would invest  133,000  in NIPPON PROLOGIS REIT on December 21, 2024 and sell it today you would earn a total of  10,000  from holding NIPPON PROLOGIS REIT or generate 7.52% return on investment over 90 days.

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

NIPPON PROLOGIS REIT  vs.  Virtu Financial

NIPPON PROLOGIS REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NIPPON PROLOGIS REIT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, NIPPON PROLOGIS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Virtu Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtu Financial has generated negative risk-adjusted returns adding no value to investors with long positions. 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 NIPPON PROLOGIS and Virtu Financial

The main advantage of trading using opposite NIPPON PROLOGIS and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON PROLOGIS 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 NIPPON PROLOGIS REIT 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.