Correlation Between Global X and Virtus Real
Can any of the company-specific risk be diversified away by investing in both Global X and Virtus Real 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 Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Thematic and Virtus Real Asset, you can compare the effects of market volatilities on Global X and Virtus Real 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 Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Virtus Real.
Diversification Opportunities for Global X and Virtus Real
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Virtus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and Virtus Real Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Real Asset 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 Thematic are associated (or correlated) with Virtus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Real Asset has no effect on the direction of Global X i.e., Global X and Virtus Real go up and down completely randomly.
Pair Corralation between Global X and Virtus Real
Given the investment horizon of 90 days Global X Thematic is expected to under-perform the Virtus Real. In addition to that, Global X is 1.38 times more volatile than Virtus Real Asset. It trades about -0.24 of its total potential returns per unit of risk. Virtus Real Asset is currently generating about -0.14 per unit of volatility. If you would invest 2,368 in Virtus Real Asset on October 7, 2024 and sell it today you would lose (64.00) from holding Virtus Real Asset or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Thematic vs. Virtus Real Asset
Performance |
| Timeline |
| Global X Thematic |
| Virtus Real Asset |
Global X and Virtus Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Virtus Real
The main advantage of trading using opposite Global X and Virtus Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Virtus Real 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 Real will offset losses from the drop in Virtus Real's long position.The idea behind Global X Thematic and Virtus Real Asset 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.| Virtus Real vs. Virtus Private Credit | Virtus Real vs. US Diversified Real | Virtus Real vs. Nuveen Short Term REIT | Virtus Real vs. JPMorgan BetaBuilders MSCI |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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