Correlation Between LOral SA and Virtus Investment

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

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

Diversification Opportunities for LOral SA and Virtus Investment

-0.48

Correlation Coefficient

LOral SA  Virtus Investment

Very good diversification

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

Pair Corralation between LOral SA and Virtus Investment

Assuming the 90 days horizon LOral SA is expected to generate 0.69 times more return on investment than Virtus Investment. However, LOral SA is 1.44 times less risky than Virtus Investment. It trades about 0.01 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.18 per unit of risk. If you would invest  34,250  in LOral SA on December 29, 2024 and sell it today you would lose (80.00) from holding LOral SA or give up 0.23% of portfolio value over 90 days.

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

LOral SA  vs.  Virtus Investment Partners

LOral SA

Risk-Adjusted Performance

Weak

Over the last 90 days LOral SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LOral SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Virtus Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Investment Partners 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.

Pair Trading with LOral SA and Virtus Investment

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

The idea behind LOral SA and Virtus Investment Partners 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.