Correlation Between Virtus Newfleet and Capital Group
Can any of the company-specific risk be diversified away by investing in both Virtus Newfleet and Capital Group 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 Newfleet and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Newfleet Multi Sector and Capital Group Short, you can compare the effects of market volatilities on Virtus Newfleet and Capital Group 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 Newfleet with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Newfleet and Capital Group.
Diversification Opportunities for Virtus Newfleet and Capital Group
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and Capital is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Newfleet Multi Sector and Capital Group Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Short and Virtus Newfleet 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 Newfleet Multi Sector are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Short has no effect on the direction of Virtus Newfleet i.e., Virtus Newfleet and Capital Group go up and down completely randomly.
Pair Corralation between Virtus Newfleet and Capital Group
Given the investment horizon of 90 days Virtus Newfleet Multi Sector is expected to generate 2.17 times more return on investment than Capital Group. However, Virtus Newfleet is 2.17 times more volatile than Capital Group Short. It trades about 0.11 of its potential returns per unit of risk. Capital Group Short is currently generating about 0.18 per unit of risk. If you would invest 2,032 in Virtus Newfleet Multi Sector on August 26, 2024 and sell it today you would earn a total of 232.00 from holding Virtus Newfleet Multi Sector or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Newfleet Multi Sector vs. Capital Group Short
Performance |
| Timeline |
| Virtus Newfleet Multi |
| Capital Group Short |
Virtus Newfleet and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Newfleet and Capital Group
The main advantage of trading using opposite Virtus Newfleet and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Newfleet position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Virtus Newfleet vs. Capital Group Short | Virtus Newfleet vs. Capital Group Municipal | Virtus Newfleet vs. Capital Group Global | Virtus Newfleet vs. Capital Group Dividend |
| Capital Group vs. Capital Group Multi Sector | Capital Group vs. Capital Group Municipal | Capital Group vs. Capital Group Global | Capital Group vs. Capital Group Dividend |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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