Correlation Between Leisure Fund and Virco Manufacturing

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

By analyzing existing cross correlation between Leisure Fund Class and Virco Manufacturing, you can compare the effects of market volatilities on Leisure Fund and Virco Manufacturing 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 Leisure Fund with a short position of Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leisure Fund and Virco Manufacturing.

Diversification Opportunities for Leisure Fund and Virco Manufacturing

0.2

Correlation Coefficient

Leisure Fund  Virco Manufacturing

Modest diversification

The 3 months correlation between Leisure and Virco is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Leisure Fund Class and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing and Leisure Fund 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 Leisure Fund Class are associated (or correlated) with Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Leisure Fund i.e., Leisure Fund and Virco Manufacturing go up and down completely randomly.

Pair Corralation between Leisure Fund and Virco Manufacturing

Assuming the 90 days horizon Leisure Fund Class is expected to generate 0.22 times more return on investment than Virco Manufacturing. However, Leisure Fund Class is 4.47 times less risky than Virco Manufacturing. It trades about -0.28 of its potential returns per unit of risk. Virco Manufacturing is currently generating about -0.5 per unit of risk. If you would invest  8,769  in Leisure Fund Class on October 4, 2024 and sell it today you would lose (494.00) from holding Leisure Fund Class or give up 5.63% of portfolio value over 90 days.

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

Leisure Fund Class  vs.  Virco Manufacturing

Leisure Fund Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leisure Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virco Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virco Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Leisure Fund and Virco Manufacturing

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

The idea behind Leisure Fund Class and Virco Manufacturing 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.