Correlation Between VirTra and Loar Holdings

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

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

Diversification Opportunities for VirTra and Loar Holdings

0.7

Correlation Coefficient

VirTra  Loar Holdings

Poor diversification

The 3 months correlation between VirTra and Loar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings and VirTra 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 VirTra Inc are associated (or correlated) with Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of VirTra i.e., VirTra and Loar Holdings go up and down completely randomly.

Pair Corralation between VirTra and Loar Holdings

Given the investment horizon of 90 days VirTra Inc is expected to under-perform the Loar Holdings. In addition to that, VirTra is 1.05 times more volatile than Loar Holdings. It trades about -0.01 of its total potential returns per unit of risk. Loar Holdings is currently generating about 0.08 per unit of volatility. If you would invest  5,939  in Loar Holdings on September 14, 2024 and sell it today you would earn a total of  1,975  from holding Loar Holdings or generate 33.25% return on investment over 90 days.

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

VirTra Inc  vs.  Loar Holdings

VirTra Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VirTra Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, VirTra demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Loar Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loar Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Loar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VirTra and Loar Holdings

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

The idea behind VirTra Inc and Loar Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.