Correlation Between VirTra and ReposiTrak

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

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

Diversification Opportunities for VirTra and ReposiTrak

0.66

Correlation Coefficient

VirTra  ReposiTrak

Poor diversification

The 3 months correlation between VirTra and ReposiTrak is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and ReposiTrak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReposiTrak 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 ReposiTrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReposiTrak has no effect on the direction of VirTra i.e., VirTra and ReposiTrak go up and down completely randomly.

Pair Corralation between VirTra and ReposiTrak

Given the investment horizon of 90 days VirTra Inc is expected to generate 1.68 times more return on investment than ReposiTrak. However, VirTra is 1.68 times more volatile than ReposiTrak. It trades about 0.06 of its potential returns per unit of risk. ReposiTrak is currently generating about 0.09 per unit of risk. If you would invest  622.00  in VirTra Inc on October 23, 2024 and sell it today you would earn a total of  61.00  from holding VirTra Inc or generate 9.81% 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.  ReposiTrak

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.

ReposiTrak

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ReposiTrak are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ReposiTrak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VirTra and ReposiTrak

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

The idea behind VirTra Inc and ReposiTrak 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.