Correlation Between Midcap Fund and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Midcap Fund and Virtus Kar 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 Midcap Fund and Virtus Kar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midcap Fund Class and Virtus Kar Mid Cap, you can compare the effects of market volatilities on Midcap Fund and Virtus Kar 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 Midcap Fund with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Fund and Virtus Kar.
Diversification Opportunities for Midcap Fund and Virtus Kar
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Midcap and Virtus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Class and Virtus Kar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Mid and Midcap Fund 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 Midcap Fund Class are associated (or correlated) with Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Mid has no effect on the direction of Midcap Fund i.e., Midcap Fund and Virtus Kar go up and down completely randomly.
Pair Corralation between Midcap Fund and Virtus Kar
Assuming the 90 days horizon Midcap Fund Class is expected to generate 0.88 times more return on investment than Virtus Kar. However, Midcap Fund Class is 1.14 times less risky than Virtus Kar. It trades about -0.13 of its potential returns per unit of risk. Virtus Kar Mid Cap is currently generating about -0.32 per unit of risk. If you would invest 4,448 in Midcap Fund Class on November 27, 2024 and sell it today you would lose (93.00) from holding Midcap Fund Class or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Midcap Fund Class vs. Virtus Kar Mid Cap
Performance |
| Timeline |
| Midcap Fund Class |
| Virtus Kar Mid |
Midcap Fund and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midcap Fund and Virtus Kar
The main advantage of trading using opposite Midcap Fund and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Fund position performs unexpectedly, Virtus Kar 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 Kar will offset losses from the drop in Virtus Kar's long position.| Midcap Fund vs. Dunham Porategovernment Bond | Midcap Fund vs. Inverse Government Long | Midcap Fund vs. Franklin Adjustable Government | Midcap Fund vs. Fidelity Series Government |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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