Correlation Between Peel Mining and Virtus Investment

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

By analyzing existing cross correlation between Peel Mining Limited and Virtus Investment Partners, you can compare the effects of market volatilities on Peel Mining and Virtus Investment 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 Peel Mining with a short position of Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peel Mining and Virtus Investment.

Diversification Opportunities for Peel Mining and Virtus Investment

0.83

Correlation Coefficient

Peel Mining  Virtus Investment

Very poor diversification

The 3 months correlation between Peel and Virtus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining Limited and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment and Peel Mining 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 Peel Mining Limited are associated (or correlated) with Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Peel Mining i.e., Peel Mining and Virtus Investment go up and down completely randomly.

Pair Corralation between Peel Mining and Virtus Investment

Assuming the 90 days horizon Peel Mining Limited is expected to under-perform the Virtus Investment. In addition to that, Peel Mining is 1.98 times more volatile than Virtus Investment Partners. It trades about -0.11 of its total potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.19 per unit of volatility. If you would invest  21,157  in Virtus Investment Partners on December 25, 2024 and sell it today you would lose (5,057) from holding Virtus Investment Partners or give up 23.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Peel Mining Limited  vs.  Virtus Investment Partners

Peel Mining Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peel Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Virtus Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Peel Mining and Virtus Investment

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

The idea behind Peel Mining Limited and Virtus Investment Partners 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .