Correlation Between Metropolitan West and Virtus Bond
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Virtus Bond 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 Metropolitan West and Virtus Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and Virtus Bond Fund, you can compare the effects of market volatilities on Metropolitan West and Virtus Bond 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 Metropolitan West with a short position of Virtus Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Virtus Bond.
Diversification Opportunities for Metropolitan West and Virtus Bond
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Metropolitan and Virtus is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond Fund and Metropolitan West 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 Metropolitan West Total are associated (or correlated) with Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Metropolitan West i.e., Metropolitan West and Virtus Bond go up and down completely randomly.
Pair Corralation between Metropolitan West and Virtus Bond
Assuming the 90 days horizon Metropolitan West Total is expected to generate 1.34 times more return on investment than Virtus Bond. However, Metropolitan West is 1.34 times more volatile than Virtus Bond Fund. It trades about 0.12 of its potential returns per unit of risk. Virtus Bond Fund is currently generating about 0.11 per unit of risk. If you would invest 903.00 in Metropolitan West Total on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Metropolitan West Total or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Total vs. Virtus Bond Fund
Performance |
| Timeline |
| Metropolitan West Total |
| Virtus Bond Fund |
Metropolitan West and Virtus Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Virtus Bond
The main advantage of trading using opposite Metropolitan West and Virtus Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Virtus Bond 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 Bond will offset losses from the drop in Virtus Bond's long position.| Metropolitan West vs. Live Oak Health | Metropolitan West vs. Eventide Healthcare Life | Metropolitan West vs. Alger Health Sciences | Metropolitan West vs. Alphacentric Lifesci Healthcare |
| Virtus Bond vs. Metropolitan West Total | Virtus Bond vs. Metropolitan West Total | Virtus Bond vs. Pimco Total Return | Virtus Bond vs. Total Return 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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