Correlation Between American Funds and Virtus International
Can any of the company-specific risk be diversified away by investing in both American Funds and Virtus International 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 American Funds and Virtus International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Inflation and Virtus International Small Cap, you can compare the effects of market volatilities on American Funds and Virtus International 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 American Funds with a short position of Virtus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Virtus International.
Diversification Opportunities for American Funds and Virtus International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Virtus is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Virtus International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus International and American Funds 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 American Funds Inflation are associated (or correlated) with Virtus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus International has no effect on the direction of American Funds i.e., American Funds and Virtus International go up and down completely randomly.
Pair Corralation between American Funds and Virtus International
Assuming the 90 days horizon American Funds is expected to generate 2.09 times less return on investment than Virtus International. But when comparing it to its historical volatility, American Funds Inflation is 2.24 times less risky than Virtus International. It trades about 0.07 of its potential returns per unit of risk. Virtus International Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,664 in Virtus International Small Cap on September 4, 2024 and sell it today you would earn a total of 197.00 from holding Virtus International Small Cap or generate 11.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Inflation vs. Virtus International Small Cap
Performance |
| Timeline |
| American Funds Inflation |
| Virtus International |
American Funds and Virtus International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Virtus International
The main advantage of trading using opposite American Funds and Virtus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Virtus International 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 International will offset losses from the drop in Virtus International's long position.| American Funds vs. Bbh Intermediate Municipal | American Funds vs. Bbh Intermediate Municipal | American Funds vs. Blrc Sgy Mnp | American Funds vs. Federated Pennsylvania Municipal |
| Virtus International vs. Fuller Thaler Behavioral | Virtus International vs. Wasatch Small Cap | Virtus International vs. Lord Abbett Diversified | Virtus International vs. Legg Mason Bw |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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