Correlation Between Virgin Group and Metalink

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

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

Diversification Opportunities for Virgin Group and Metalink

0.48

Correlation Coefficient

Virgin Group  Metalink

Very weak diversification

The 3 months correlation between Virgin and Metalink is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Group Acquisition and Metalink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalink and Virgin 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 Virgin Group Acquisition are associated (or correlated) with Metalink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalink has no effect on the direction of Virgin Group i.e., Virgin Group and Metalink go up and down completely randomly.

Pair Corralation between Virgin Group and Metalink

Given the investment horizon of 90 days Virgin Group Acquisition is expected to generate 15.65 times more return on investment than Metalink. However, Virgin Group is 15.65 times more volatile than Metalink. It trades about 0.03 of its potential returns per unit of risk. Metalink is currently generating about 0.13 per unit of risk. If you would invest  137.00  in Virgin Group Acquisition on October 24, 2024 and sell it today you would earn a total of  2.00  from holding Virgin Group Acquisition or generate 1.46% return on investment over 90 days.

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

Virgin Group Acquisition  vs.  Metalink

Virgin Group Acquisition

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Group Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Virgin Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Metalink

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metalink are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Metalink is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Virgin Group and Metalink

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

The idea behind Virgin Group Acquisition and Metalink 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.