Correlation Between Virtus InfraCap and First Trust
Can any of the company-specific risk be diversified away by investing in both Virtus InfraCap and First Trust 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 InfraCap and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus InfraCap Preferred and First Trust Tactical, you can compare the effects of market volatilities on Virtus InfraCap and First Trust 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 InfraCap with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus InfraCap and First Trust.
Diversification Opportunities for Virtus InfraCap and First Trust
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virtus and First is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Virtus InfraCap Preferred and First Trust Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Tactical and Virtus InfraCap 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 InfraCap Preferred are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Tactical has no effect on the direction of Virtus InfraCap i.e., Virtus InfraCap and First Trust go up and down completely randomly.
Pair Corralation between Virtus InfraCap and First Trust
Given the investment horizon of 90 days Virtus InfraCap Preferred is expected to generate 2.41 times more return on investment than First Trust. However, Virtus InfraCap is 2.41 times more volatile than First Trust Tactical. It trades about 0.19 of its potential returns per unit of risk. First Trust Tactical is currently generating about 0.25 per unit of risk. If you would invest 2,025 in Virtus InfraCap Preferred on September 12, 2024 and sell it today you would earn a total of 239.00 from holding Virtus InfraCap Preferred or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus InfraCap Preferred vs. First Trust Tactical
Performance |
| Timeline |
| Virtus InfraCap Preferred |
| First Trust Tactical |
Virtus InfraCap and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus InfraCap and First Trust
The main advantage of trading using opposite Virtus InfraCap and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus InfraCap position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Virtus InfraCap vs. First Trust Tactical | Virtus InfraCap vs. First Trust Senior | Virtus InfraCap vs. SPDR ICE Preferred |
| First Trust vs. First Trust Senior | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust TCW |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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