Correlation Between Virtu Financial and XAI Octagon

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

By analyzing existing cross correlation between Virtu Financial and XAI Octagon Floating, you can compare the effects of market volatilities on Virtu Financial and XAI Octagon 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 Virtu Financial with a short position of XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtu Financial and XAI Octagon.

Diversification Opportunities for Virtu Financial and XAI Octagon

0.2

Correlation Coefficient

Virtu Financial  XAI Octagon

Modest diversification

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

Pair Corralation between Virtu Financial and XAI Octagon

Given the investment horizon of 90 days Virtu Financial is expected to generate 2.77 times more return on investment than XAI Octagon. However, Virtu Financial is 2.77 times more volatile than XAI Octagon Floating. It trades about 0.05 of its potential returns per unit of risk. XAI Octagon Floating is currently generating about -0.13 per unit of risk. If you would invest  3,636  in Virtu Financial on December 27, 2024 and sell it today you would earn a total of  218.00  from holding Virtu Financial or generate 6.0% return on investment over 90 days.

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

Virtu Financial  vs.  XAI Octagon Floating

Virtu Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Virtu Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

XAI Octagon Floating

Risk-Adjusted Performance

Very Weak

Over the last 90 days XAI Octagon Floating has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Virtu Financial and XAI Octagon

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

The idea behind Virtu Financial and XAI Octagon Floating 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.