Correlation Between Virtus High and Federated Institutional
Can any of the company-specific risk be diversified away by investing in both Virtus High and Federated Institutional 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 High and Federated Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus High Yield and Federated Institutional High, you can compare the effects of market volatilities on Virtus High and Federated Institutional 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 High with a short position of Federated Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus High and Federated Institutional.
Diversification Opportunities for Virtus High and Federated Institutional
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virtus and FEDERATED is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Virtus High Yield and Federated Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional and Virtus High 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 High Yield are associated (or correlated) with Federated Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of Virtus High i.e., Virtus High and Federated Institutional go up and down completely randomly.
Pair Corralation between Virtus High and Federated Institutional
Assuming the 90 days horizon Virtus High Yield is expected to generate 1.1 times more return on investment than Federated Institutional. However, Virtus High is 1.1 times more volatile than Federated Institutional High. It trades about 0.15 of its potential returns per unit of risk. Federated Institutional High is currently generating about 0.15 per unit of risk. If you would invest 326.00 in Virtus High Yield on August 31, 2024 and sell it today you would earn a total of 56.00 from holding Virtus High Yield or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Virtus High Yield vs. Federated Institutional High
Performance |
| Timeline |
| Virtus High Yield |
| Federated Institutional |
Virtus High and Federated Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus High and Federated Institutional
The main advantage of trading using opposite Virtus High and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus High position performs unexpectedly, Federated Institutional 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 Federated Institutional will offset losses from the drop in Federated Institutional's long position.| Virtus High vs. Vanguard High Yield Corporate | Virtus High vs. Vanguard High Yield Porate | Virtus High vs. Blackrock Hi Yld | Virtus High vs. Blackrock High Yield |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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