Correlation Between Virgin Galactic and Intuitive Machines

Can any of the company-specific risk be diversified away by investing in both Virgin Galactic and Intuitive Machines 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 Intuitive Machines 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 Intuitive Machines, you can compare the effects of market volatilities on Virgin Galactic and Intuitive Machines 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 Intuitive Machines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Galactic and Intuitive Machines.

Diversification Opportunities for Virgin Galactic and Intuitive Machines

0.65

Correlation Coefficient

Virgin Galactic  Intuitive Machines

Poor diversification

The 3 months correlation between Virgin and Intuitive is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Galactic Holdings and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines 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 Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of Virgin Galactic i.e., Virgin Galactic and Intuitive Machines go up and down completely randomly.

Pair Corralation between Virgin Galactic and Intuitive Machines

Given the investment horizon of 90 days Virgin Galactic Holdings is expected to under-perform the Intuitive Machines. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Galactic Holdings is 1.87 times less risky than Intuitive Machines. The stock trades about -0.2 of its potential returns per unit of risk. The Intuitive Machines is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,894  in Intuitive Machines on December 30, 2024 and sell it today you would lose (1,087) from holding Intuitive Machines or give up 57.39% of portfolio value over 90 days.

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

Virgin Galactic Holdings  vs.  Intuitive Machines

Virgin Galactic Holdings

Risk-Adjusted Performance

Very Weak

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

Intuitive Machines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuitive Machines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Virgin Galactic and Intuitive Machines

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

The idea behind Virgin Galactic Holdings and Intuitive Machines 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.