Correlation Between Global X and Virtus WMC
Can any of the company-specific risk be diversified away by investing in both Global X and Virtus WMC 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 Global X and Virtus WMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MSCI and Virtus WMC International, you can compare the effects of market volatilities on Global X and Virtus WMC 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 Global X with a short position of Virtus WMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Virtus WMC.
Diversification Opportunities for Global X and Virtus WMC
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Virtus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI and Virtus WMC International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus WMC International and Global X 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 Global X MSCI are associated (or correlated) with Virtus WMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus WMC International has no effect on the direction of Global X i.e., Global X and Virtus WMC go up and down completely randomly.
Pair Corralation between Global X and Virtus WMC
Given the investment horizon of 90 days Global X MSCI is expected to generate 1.32 times more return on investment than Virtus WMC. However, Global X is 1.32 times more volatile than Virtus WMC International. It trades about -0.12 of its potential returns per unit of risk. Virtus WMC International is currently generating about -0.18 per unit of risk. If you would invest 1,484 in Global X MSCI on August 27, 2024 and sell it today you would lose (39.00) from holding Global X MSCI or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X MSCI vs. Virtus WMC International
Performance |
| Timeline |
| Global X MSCI |
| Virtus WMC International |
Global X and Virtus WMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Virtus WMC
The main advantage of trading using opposite Global X and Virtus WMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Virtus WMC 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 WMC will offset losses from the drop in Virtus WMC's long position.| Global X vs. Dimensional Targeted Value | Global X vs. Dimensional Small Cap | Global X vs. Dimensional Marketwide Value | Global X vs. Dimensional Core Equity |
| Virtus WMC vs. Franklin Templeton ETF | Virtus WMC vs. Altrius Global Dividend | Virtus WMC vs. Invesco Exchange Traded | Virtus WMC vs. Franklin International Core |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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