Correlation Between European Equity and Virtus Global
Can any of the company-specific risk be diversified away by investing in both European Equity and Virtus Global 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 European Equity and Virtus Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Equity Closed and Virtus Global Multi, you can compare the effects of market volatilities on European Equity and Virtus Global 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 European Equity with a short position of Virtus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and Virtus Global.
Diversification Opportunities for European Equity and Virtus Global
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Virtus is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and Virtus Global Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Global Multi and European Equity 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 European Equity Closed are associated (or correlated) with Virtus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Global Multi has no effect on the direction of European Equity i.e., European Equity and Virtus Global go up and down completely randomly.
Pair Corralation between European Equity and Virtus Global
Considering the 90-day investment horizon European Equity Closed is expected to under-perform the Virtus Global. In addition to that, European Equity is 1.91 times more volatile than Virtus Global Multi. It trades about -0.24 of its total potential returns per unit of risk. Virtus Global Multi is currently generating about 0.24 per unit of volatility. If you would invest 784.00 in Virtus Global Multi on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Virtus Global Multi or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Equity Closed vs. Virtus Global Multi
Performance |
| Timeline |
| European Equity Closed |
| Virtus Global Multi |
European Equity and Virtus Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Equity and Virtus Global
The main advantage of trading using opposite European Equity and Virtus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity position performs unexpectedly, Virtus Global 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 Global will offset losses from the drop in Virtus Global's long position.| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Invesco High Income |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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