Correlation Between Virgin Galactic and Environmmtl Tectonic

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

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

Diversification Opportunities for Virgin Galactic and Environmmtl Tectonic

-0.11

Correlation Coefficient

Virgin Galactic  Environmmtl Tectonic

Good diversification

The 3 months correlation between Virgin and Environmmtl is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Galactic Holdings and Environmmtl Tectonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmmtl Tectonic and Virgin Galactic 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 Galactic Holdings are associated (or correlated) with Environmmtl Tectonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmmtl Tectonic has no effect on the direction of Virgin Galactic i.e., Virgin Galactic and Environmmtl Tectonic go up and down completely randomly.

Pair Corralation between Virgin Galactic and Environmmtl Tectonic

Given the investment horizon of 90 days Virgin Galactic Holdings is expected to under-perform the Environmmtl Tectonic. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Galactic Holdings is 1.19 times less risky than Environmmtl Tectonic. The stock trades about -0.14 of its potential returns per unit of risk. The Environmmtl Tectonic is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Environmmtl Tectonic on October 4, 2024 and sell it today you would earn a total of  16.00  from holding Environmmtl Tectonic or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Virgin Galactic Holdings  vs.  Environmmtl Tectonic

Virgin Galactic Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Galactic Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Virgin Galactic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Environmmtl Tectonic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Environmmtl Tectonic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Environmmtl Tectonic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Virgin Galactic and Environmmtl Tectonic

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

The idea behind Virgin Galactic Holdings and Environmmtl Tectonic 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 Global Correlations module to find global opportunities by holding instruments from different markets.