Correlation Between ETF Series and Virtus InfraCap
Can any of the company-specific risk be diversified away by investing in both ETF Series and Virtus InfraCap 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 ETF Series and Virtus InfraCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and Virtus InfraCap Preferred, you can compare the effects of market volatilities on ETF Series and Virtus InfraCap 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 ETF Series with a short position of Virtus InfraCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and Virtus InfraCap.
Diversification Opportunities for ETF Series and Virtus InfraCap
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETF and Virtus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and Virtus InfraCap Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus InfraCap Preferred and ETF Series 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 ETF Series Solutions are associated (or correlated) with Virtus InfraCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus InfraCap Preferred has no effect on the direction of ETF Series i.e., ETF Series and Virtus InfraCap go up and down completely randomly.
Pair Corralation between ETF Series and Virtus InfraCap
Given the investment horizon of 90 days ETF Series is expected to generate 1.01 times less return on investment than Virtus InfraCap. In addition to that, ETF Series is 1.93 times more volatile than Virtus InfraCap Preferred. It trades about 0.09 of its total potential returns per unit of risk. Virtus InfraCap Preferred is currently generating about 0.18 per unit of volatility. If you would invest 1,768 in Virtus InfraCap Preferred on August 26, 2024 and sell it today you would earn a total of 478.00 from holding Virtus InfraCap Preferred or generate 27.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. Virtus InfraCap Preferred
Performance |
| Timeline |
| ETF Series Solutions |
| Virtus InfraCap Preferred |
ETF Series and Virtus InfraCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and Virtus InfraCap
The main advantage of trading using opposite ETF Series and Virtus InfraCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series position performs unexpectedly, Virtus InfraCap 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 InfraCap will offset losses from the drop in Virtus InfraCap's long position.| ETF Series vs. Tidal Trust II | ETF Series vs. Tidal Trust II | ETF Series vs. First Trust Dorsey | ETF Series vs. Direxion Daily META |
| Virtus InfraCap vs. ETF Series Solutions | Virtus InfraCap vs. Aquagold International | Virtus InfraCap vs. Morningstar Unconstrained Allocation | Virtus InfraCap vs. High Yield Municipal 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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