Correlation Between California High-yield and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both California High-yield and Virtus Kar 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 California High-yield and Virtus Kar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Virtus Kar Small Cap, you can compare the effects of market volatilities on California High-yield and Virtus Kar 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 California High-yield with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Virtus Kar.
Diversification Opportunities for California High-yield and Virtus Kar
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Virtus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small and California High-yield 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 California High Yield Municipal are associated (or correlated) with Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of California High-yield i.e., California High-yield and Virtus Kar go up and down completely randomly.
Pair Corralation between California High-yield and Virtus Kar
Assuming the 90 days horizon California High-yield is expected to generate 2.89 times less return on investment than Virtus Kar. But when comparing it to its historical volatility, California High Yield Municipal is 4.2 times less risky than Virtus Kar. It trades about 0.08 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,237 in Virtus Kar Small Cap on September 2, 2024 and sell it today you would earn a total of 694.00 from holding Virtus Kar Small Cap or generate 31.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Virtus Kar Small Cap
Performance |
| Timeline |
| California High Yield |
| Virtus Kar Small |
California High-yield and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Virtus Kar
The main advantage of trading using opposite California High-yield and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Virtus Kar 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 Kar will offset losses from the drop in Virtus Kar's long position.| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
| Virtus Kar vs. Bbh Intermediate Municipal | Virtus Kar vs. Gamco Global Telecommunications | Virtus Kar vs. California High Yield Municipal | Virtus Kar vs. The National Tax Free |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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