Correlation Between SIFCO Industries and Virgin Galactic

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

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

Diversification Opportunities for SIFCO Industries and Virgin Galactic

0.33

Correlation Coefficient

SIFCO Industries  Virgin Galactic

Weak diversification

The 3 months correlation between SIFCO and Virgin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SIFCO Industries and Virgin Galactic Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Galactic Holdings and SIFCO Industries 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 SIFCO Industries are associated (or correlated) with Virgin Galactic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Galactic Holdings has no effect on the direction of SIFCO Industries i.e., SIFCO Industries and Virgin Galactic go up and down completely randomly.

Pair Corralation between SIFCO Industries and Virgin Galactic

Considering the 90-day investment horizon SIFCO Industries is expected to generate 0.6 times more return on investment than Virgin Galactic. However, SIFCO Industries is 1.66 times less risky than Virgin Galactic. It trades about 0.19 of its potential returns per unit of risk. Virgin Galactic Holdings is currently generating about 0.08 per unit of risk. If you would invest  280.00  in SIFCO Industries on May 5, 2025 and sell it today you would earn a total of  169.00  from holding SIFCO Industries or generate 60.36% return on investment over 90 days.

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

SIFCO Industries  vs.  Virgin Galactic Holdings

SIFCO Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIFCO Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, SIFCO Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Virgin Galactic Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Galactic Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Virgin Galactic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIFCO Industries and Virgin Galactic

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

The idea behind SIFCO Industries and Virgin Galactic 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.