Correlation Between PHINIA and Virgin Group

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

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

Diversification Opportunities for PHINIA and Virgin Group

0.28

Correlation Coefficient

PHINIA  Virgin Group

Modest diversification

The 3 months correlation between PHINIA and Virgin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PHINIA Inc and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition and PHINIA 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 PHINIA Inc are associated (or correlated) with Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of PHINIA i.e., PHINIA and Virgin Group go up and down completely randomly.

Pair Corralation between PHINIA and Virgin Group

Given the investment horizon of 90 days PHINIA Inc is expected to generate 0.54 times more return on investment than Virgin Group. However, PHINIA Inc is 1.86 times less risky than Virgin Group. It trades about 0.12 of its potential returns per unit of risk. Virgin Group Acquisition is currently generating about 0.0 per unit of risk. If you would invest  2,907  in PHINIA Inc on October 24, 2024 and sell it today you would earn a total of  2,241  from holding PHINIA Inc or generate 77.09% return on investment over 90 days.

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

PHINIA Inc  vs.  Virgin Group Acquisition

PHINIA Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, PHINIA displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with PHINIA and Virgin Group

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

The idea behind PHINIA Inc and Virgin Group Acquisition 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.