Correlation Between Brandes Small and Virtus Convertible
Can any of the company-specific risk be diversified away by investing in both Brandes Small and Virtus Convertible 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 Brandes Small and Virtus Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brandes Small Cap and Virtus Convertible, you can compare the effects of market volatilities on Brandes Small and Virtus Convertible 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 Brandes Small with a short position of Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Small and Virtus Convertible.
Diversification Opportunities for Brandes Small and Virtus Convertible
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brandes and Virtus is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Small Cap and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Brandes Small 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 Brandes Small Cap are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Brandes Small i.e., Brandes Small and Virtus Convertible go up and down completely randomly.
Pair Corralation between Brandes Small and Virtus Convertible
Assuming the 90 days horizon Brandes Small Cap is expected to generate 2.12 times more return on investment than Virtus Convertible. However, Brandes Small is 2.12 times more volatile than Virtus Convertible. It trades about 0.44 of its potential returns per unit of risk. Virtus Convertible is currently generating about 0.67 per unit of risk. If you would invest 1,587 in Brandes Small Cap on September 4, 2024 and sell it today you would earn a total of 200.00 from holding Brandes Small Cap or generate 12.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Brandes Small Cap vs. Virtus Convertible
Performance |
| Timeline |
| Brandes Small Cap |
| Virtus Convertible |
Brandes Small and Virtus Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Small and Virtus Convertible
The main advantage of trading using opposite Brandes Small and Virtus Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Small position performs unexpectedly, Virtus Convertible 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 Convertible will offset losses from the drop in Virtus Convertible's long position.| Brandes Small vs. Legg Mason Partners | Brandes Small vs. Ep Emerging Markets | Brandes Small vs. Artisan Emerging Markets | Brandes Small vs. Nasdaq 100 2x Strategy |
| Virtus Convertible vs. Gmo High Yield | Virtus Convertible vs. Pace High Yield | Virtus Convertible vs. Calvert High Yield | Virtus Convertible vs. Pgim High Yield |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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