Correlation Between American Funds and Virtus Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds and Virtus Emerging 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 Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Virtus Emerging Markets, you can compare the effects of market volatilities on American Funds and Virtus Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Virtus Emerging.
Diversification Opportunities for American Funds and Virtus Emerging
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Virtus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Virtus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Emerging Markets 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 New are associated (or correlated) with Virtus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Emerging Markets has no effect on the direction of American Funds i.e., American Funds and Virtus Emerging go up and down completely randomly.
Pair Corralation between American Funds and Virtus Emerging
Assuming the 90 days horizon American Funds New is expected to generate 1.13 times more return on investment than Virtus Emerging. However, American Funds is 1.13 times more volatile than Virtus Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Virtus Emerging Markets is currently generating about 0.09 per unit of risk. If you would invest 6,878 in American Funds New on September 4, 2024 and sell it today you would earn a total of 1,208 from holding American Funds New or generate 17.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Virtus Emerging Markets
Performance |
| Timeline |
| American Funds New |
| Virtus Emerging Markets |
American Funds and Virtus Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Virtus Emerging
The main advantage of trading using opposite American Funds and Virtus Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Virtus Emerging 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 Emerging will offset losses from the drop in Virtus Emerging's long position.| American Funds vs. Fidelity Capital Income | American Funds vs. Guggenheim High Yield | American Funds vs. Blackrock High Yield | American Funds vs. Prudential High Yield |
| Virtus Emerging vs. Semiconductor Ultrasector Profund | Virtus Emerging vs. Small Cap Stock | Virtus Emerging vs. Vanguard Windsor Fund | Virtus Emerging vs. Ab Value Fund |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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