Correlation Between Empire State and Virtus Kar

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Virtus Kar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Virtus Kar Small Cap, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Virtus Kar.

Diversification Opportunities for Empire State and Virtus Kar

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Empire and Virtus is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty 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 Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and Virtus Kar go up and down completely randomly.

Pair Corralation between Empire State and Virtus Kar

Given the investment horizon of 90 days Empire State is expected to generate 1.08 times less return on investment than Virtus Kar. In addition to that, Empire State is 1.41 times more volatile than Virtus Kar Small Cap. It trades about 0.06 of its total potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.09 per unit of volatility. If you would invest  2,903  in Virtus Kar Small Cap on September 1, 2024 and sell it today you would earn a total of  900.00  from holding Virtus Kar Small Cap or generate 31.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Empire State Realty  vs.  Virtus Kar Small Cap

 Performance 
       Timeline  
Empire State Realty 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Empire State Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Empire State is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Virtus Kar Small 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Virtus Kar showed solid returns over the last few months and may actually be approaching a breakup point.

Empire State and Virtus Kar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Empire State and Virtus Kar

The main advantage of trading using opposite Empire State and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.
The idea behind Empire State Realty and Virtus Kar Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments