Correlation Between NYSE Composite and Virtus ETF
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Virtus ETF 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 NYSE Composite and Virtus ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Virtus ETF Trust, you can compare the effects of market volatilities on NYSE Composite and Virtus ETF 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 NYSE Composite with a short position of Virtus ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Virtus ETF.
Diversification Opportunities for NYSE Composite and Virtus ETF
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Virtus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust and NYSE Composite 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 NYSE Composite are associated (or correlated) with Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of NYSE Composite i.e., NYSE Composite and Virtus ETF go up and down completely randomly.
Pair Corralation between NYSE Composite and Virtus ETF
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.49 times more return on investment than Virtus ETF. However, NYSE Composite is 1.49 times more volatile than Virtus ETF Trust. It trades about 0.41 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.2 per unit of risk. If you would invest 1,925,354 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 101,850 from holding NYSE Composite or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Virtus ETF Trust
Performance |
| Timeline |
NYSE Composite and Virtus ETF Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Virtus ETF Trust
Pair trading matchups for Virtus ETF
Pair Trading with NYSE Composite and Virtus ETF
The main advantage of trading using opposite NYSE Composite and Virtus ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Virtus ETF 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 ETF will offset losses from the drop in Virtus ETF's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Virtus ETF vs. VanEck Vectors Moodys | Virtus ETF vs. BondBloxx ETF Trust | Virtus ETF vs. Vanguard ESG Corporate | Virtus ETF vs. Vanguard Intermediate Term Corporate |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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