Correlation Between Inflation Protected and Virtus International
Can any of the company-specific risk be diversified away by investing in both Inflation Protected 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 Inflation Protected and Virtus International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Virtus International Small Cap, you can compare the effects of market volatilities on Inflation Protected 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 Inflation Protected with a short position of Virtus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protected and Virtus International.
Diversification Opportunities for Inflation Protected and Virtus International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Inflation and Virtus is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund 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 Inflation Protected 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 Inflation Protected Bond Fund 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 Inflation Protected i.e., Inflation Protected and Virtus International go up and down completely randomly.
Pair Corralation between Inflation Protected and Virtus International
Assuming the 90 days horizon Inflation Protected is expected to generate 1.18 times less return on investment than Virtus International. But when comparing it to its historical volatility, Inflation Protected Bond Fund is 1.63 times less risky than Virtus International. It trades about 0.12 of its potential returns per unit of risk. Virtus International Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,747 in Virtus International Small Cap on September 12, 2024 and sell it today you would earn a total of 143.00 from holding Virtus International Small Cap or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Virtus International Small Cap
Performance |
| Timeline |
| Inflation Protected |
| Virtus International |
Inflation Protected and Virtus International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Protected and Virtus International
The main advantage of trading using opposite Inflation Protected and Virtus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Protected 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.| Inflation Protected vs. Aqr Large Cap | Inflation Protected vs. Pace Large Growth | Inflation Protected vs. Old Westbury Large | Inflation Protected vs. Rational Strategic Allocation |
| Virtus International vs. Siit High Yield | Virtus International vs. Ab Global Risk | Virtus International vs. Franklin High Income | Virtus International vs. Ppm High Yield |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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