Correlation Between VirTra and Thales SA

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

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

Diversification Opportunities for VirTra and Thales SA

-0.5

Correlation Coefficient

VirTra  Thales SA

Very good diversification

The 3 months correlation between VirTra and Thales is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of VirTra i.e., VirTra and Thales SA go up and down completely randomly.

Pair Corralation between VirTra and Thales SA

Given the investment horizon of 90 days VirTra Inc is expected to generate 2.86 times more return on investment than Thales SA. However, VirTra is 2.86 times more volatile than Thales SA. It trades about 0.11 of its potential returns per unit of risk. Thales SA is currently generating about -0.07 per unit of risk. If you would invest  596.00  in VirTra Inc on September 5, 2024 and sell it today you would earn a total of  154.00  from holding VirTra Inc or generate 25.84% return on investment over 90 days.

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

VirTra Inc  vs.  Thales SA

VirTra Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VirTra Inc are ranked lower than 8 (%) 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.

Thales SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thales SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with VirTra and Thales SA

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

The idea behind VirTra Inc and Thales SA 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 CEOs Directory module to screen CEOs from public companies around the world.