Correlation Between Virgin Galactic and Textron

Can any of the company-specific risk be diversified away by investing in both Virgin Galactic and Textron 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 Textron 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 Textron, you can compare the effects of market volatilities on Virgin Galactic and Textron 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 Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Galactic and Textron.

Diversification Opportunities for Virgin Galactic and Textron

0.36

Correlation Coefficient

Virgin Galactic  Textron

Weak diversification

The 3 months correlation between Virgin and Textron is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Galactic Holdings, and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Virgin Galactic i.e., Virgin Galactic and Textron go up and down completely randomly.

Pair Corralation between Virgin Galactic and Textron

Assuming the 90 days trading horizon Virgin Galactic Holdings, is expected to generate 3.58 times more return on investment than Textron. However, Virgin Galactic is 3.58 times more volatile than Textron. It trades about 0.11 of its potential returns per unit of risk. Textron is currently generating about 0.15 per unit of risk. If you would invest  4,863  in Virgin Galactic Holdings, on April 21, 2025 and sell it today you would earn a total of  2,185  from holding Virgin Galactic Holdings, or generate 44.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Virgin Galactic Holdings,  vs.  Textron

Virgin Galactic Holdings,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Galactic Holdings, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Virgin Galactic showed solid returns over the last few months and may actually be approaching a breakup point.

Textron

Risk-Adjusted Performance

Good

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

Pair Trading with Virgin Galactic and Textron

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

The idea behind Virgin Galactic Holdings, and Textron 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.