Correlation Between Virco Manufacturing and Civeo Corp

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

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

Diversification Opportunities for Virco Manufacturing and Civeo Corp

-0.08

Correlation Coefficient

Virco Manufacturing  Civeo Corp

Good diversification

The 3 months correlation between Virco and Civeo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing and Civeo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civeo Corp and Virco Manufacturing 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 Virco Manufacturing are associated (or correlated) with Civeo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civeo Corp has no effect on the direction of Virco Manufacturing i.e., Virco Manufacturing and Civeo Corp go up and down completely randomly.

Pair Corralation between Virco Manufacturing and Civeo Corp

Given the investment horizon of 90 days Virco Manufacturing is expected to under-perform the Civeo Corp. In addition to that, Virco Manufacturing is 1.42 times more volatile than Civeo Corp. It trades about -0.19 of its total potential returns per unit of risk. Civeo Corp is currently generating about 0.01 per unit of volatility. If you would invest  2,317  in Civeo Corp on November 29, 2024 and sell it today you would lose (8.00) from holding Civeo Corp or give up 0.35% of portfolio value over 90 days.

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

Virco Manufacturing  vs.  Civeo Corp

Virco Manufacturing

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Civeo Corp

Risk-Adjusted Performance

Good

Over the last 90 days Civeo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Civeo Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Virco Manufacturing and Civeo Corp

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

The idea behind Virco Manufacturing and Civeo Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.