Correlation Between BitFuFu and Virtu Financial

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

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

Diversification Opportunities for BitFuFu and Virtu Financial

-0.15

Correlation Coefficient

BitFuFu  Virtu Financial

Good diversification

The 3 months correlation between BitFuFu and Virtu is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding BitFuFu Class A and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and BitFuFu 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 BitFuFu Class A are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of BitFuFu i.e., BitFuFu and Virtu Financial go up and down completely randomly.

Pair Corralation between BitFuFu and Virtu Financial

Given the investment horizon of 90 days BitFuFu Class A is expected to under-perform the Virtu Financial. In addition to that, BitFuFu is 2.83 times more volatile than Virtu Financial. It trades about -0.04 of its total potential returns per unit of risk. Virtu Financial is currently generating about 0.17 per unit of volatility. If you would invest  2,338  in Virtu Financial on June 23, 2024 and sell it today you would earn a total of  757.00  from holding Virtu Financial or generate 32.38% return on investment over 90 days.

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

BitFuFu Class A  vs.  Virtu Financial

BitFuFu Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BitFuFu Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in October 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Virtu Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Virtu Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BitFuFu and Virtu Financial

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

The idea behind BitFuFu Class A and Virtu Financial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.