Correlation Between Virtus Emerging and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Virtus Emerging and Metropolitan West 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 Virtus Emerging and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Emerging Markets and Metropolitan West Total, you can compare the effects of market volatilities on Virtus Emerging and Metropolitan West 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 Virtus Emerging with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Emerging and Metropolitan West.
Diversification Opportunities for Virtus Emerging and Metropolitan West
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Virtus and Metropolitan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Emerging Markets and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total and Virtus Emerging 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 Virtus Emerging Markets are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Virtus Emerging i.e., Virtus Emerging and Metropolitan West go up and down completely randomly.
Pair Corralation between Virtus Emerging and Metropolitan West
Assuming the 90 days horizon Virtus Emerging Markets is expected to under-perform the Metropolitan West. In addition to that, Virtus Emerging is 1.8 times more volatile than Metropolitan West Total. It trades about -0.03 of its total potential returns per unit of risk. Metropolitan West Total is currently generating about 0.04 per unit of volatility. If you would invest 847.00 in Metropolitan West Total on August 26, 2024 and sell it today you would earn a total of 49.00 from holding Metropolitan West Total or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Emerging Markets vs. Metropolitan West Total
Performance |
| Timeline |
| Virtus Emerging Markets |
| Metropolitan West Total |
Virtus Emerging and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Emerging and Metropolitan West
The main advantage of trading using opposite Virtus Emerging and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Emerging position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Virtus Emerging vs. Metropolitan West Total | Virtus Emerging vs. Janus Flexible Bond | Virtus Emerging vs. Eaton Vance Income | Virtus Emerging vs. Mfs Emerging Markets |
| Metropolitan West vs. Europacific Growth Fund | Metropolitan West vs. Templeton Global Bond | Metropolitan West vs. Mfs Value Fund | Metropolitan West vs. Mfs Emerging Markets |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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