Correlation Between Evercore Partners and Virtu Financial

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

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

Diversification Opportunities for Evercore Partners and Virtu Financial

0.78

Correlation Coefficient

Evercore Partners  Virtu Financial

Poor diversification

The 3 months correlation between Evercore and Virtu is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Evercore Partners and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and Evercore Partners 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 Evercore Partners 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 Evercore Partners i.e., Evercore Partners and Virtu Financial go up and down completely randomly.

Pair Corralation between Evercore Partners and Virtu Financial

Considering the 90-day investment horizon Evercore Partners is expected to under-perform the Virtu Financial. In addition to that, Evercore Partners is 1.01 times more volatile than Virtu Financial. It trades about -0.17 of its total potential returns per unit of risk. Virtu Financial is currently generating about -0.09 per unit of volatility. If you would invest  3,703  in Virtu Financial on October 6, 2024 and sell it today you would lose (125.00) from holding Virtu Financial or give up 3.38% of portfolio value over 90 days.

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

Evercore Partners  vs.  Virtu Financial

Evercore Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evercore Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Evercore Partners reported solid returns over the last few months and may actually be approaching a breakup point.

Virtu Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Virtu Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evercore Partners and Virtu Financial

The main advantage of trading using opposite Evercore Partners and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evercore Partners 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 Evercore Partners 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.