Correlation Between Absolute Convertible and Virtus Bond
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Virtus Bond 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 Absolute Convertible and Virtus Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Virtus Bond Fund, you can compare the effects of market volatilities on Absolute Convertible and Virtus Bond 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 Absolute Convertible with a short position of Virtus Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Virtus Bond.
Diversification Opportunities for Absolute Convertible and Virtus Bond
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Absolute and Virtus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond Fund and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Virtus Bond go up and down completely randomly.
Pair Corralation between Absolute Convertible and Virtus Bond
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.19 times more return on investment than Virtus Bond. However, Absolute Convertible Arbitrage is 5.29 times less risky than Virtus Bond. It trades about 0.58 of its potential returns per unit of risk. Virtus Bond Fund is currently generating about -0.03 per unit of risk. If you would invest 1,129 in Absolute Convertible Arbitrage on September 3, 2024 and sell it today you would earn a total of 21.00 from holding Absolute Convertible Arbitrage or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Virtus Bond Fund
Performance |
| Timeline |
| Absolute Convertible |
| Virtus Bond Fund |
Absolute Convertible and Virtus Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Virtus Bond
The main advantage of trading using opposite Absolute Convertible and Virtus Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Virtus Bond 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 Bond will offset losses from the drop in Virtus Bond's long position.| Absolute Convertible vs. Dunham Porategovernment Bond | Absolute Convertible vs. John Hancock Government | Absolute Convertible vs. Government Securities Fund | Absolute Convertible vs. Ab Government Exchange |
| Virtus Bond vs. Ancorathelen Small Mid Cap | Virtus Bond vs. Champlain Small | Virtus Bond vs. Baird Smallmid Cap | Virtus Bond vs. The Hartford Small |
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.
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