Correlation Between Virgin Galactic and Terran Orbital
Can any of the company-specific risk be diversified away by investing in both Virgin Galactic and Terran Orbital 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 Virgin Galactic and Terran Orbital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Galactic Holdings and Terran Orbital Corp, you can compare the effects of market volatilities on Virgin Galactic and Terran Orbital 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 Virgin Galactic with a short position of Terran Orbital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Galactic and Terran Orbital.
Diversification Opportunities for Virgin Galactic and Terran Orbital
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virgin and Terran is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Galactic Holdings and Terran Orbital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terran Orbital Corp and Virgin Galactic 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 Virgin Galactic Holdings are associated (or correlated) with Terran Orbital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terran Orbital Corp has no effect on the direction of Virgin Galactic i.e., Virgin Galactic and Terran Orbital go up and down completely randomly.
Pair Corralation between Virgin Galactic and Terran Orbital
Given the investment horizon of 90 days Virgin Galactic Holdings is expected to generate 1.0 times more return on investment than Terran Orbital. However, Virgin Galactic is 1.0 times more volatile than Terran Orbital Corp. It trades about -0.1 of its potential returns per unit of risk. Terran Orbital Corp is currently generating about -0.15 per unit of risk. If you would invest 2,040 in Virgin Galactic Holdings on July 12, 2024 and sell it today you would lose (1,426) from holding Virgin Galactic Holdings or give up 69.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Virgin Galactic Holdings vs. Terran Orbital Corp
Performance |
Timeline |
Virgin Galactic Holdings |
Terran Orbital Corp |
Virgin Galactic and Terran Orbital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Virgin Galactic and Terran Orbital
The main advantage of trading using opposite Virgin Galactic and Terran Orbital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Galactic position performs unexpectedly, Terran Orbital 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 Terran Orbital will offset losses from the drop in Terran Orbital's long position.Virgin Galactic vs. Planet Labs PBC | Virgin Galactic vs. Eve Holding | Virgin Galactic vs. Redwire Corp | Virgin Galactic vs. Lockheed Martin |
Terran Orbital vs. Lilium NV | Terran Orbital vs. Archer Aviation | Terran Orbital vs. Ehang Holdings | Terran Orbital vs. Vertical Aerospace |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |