Correlation Between Virtus High and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both Virtus High and Growth Allocation 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 Growth Allocation 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 Growth Allocation Fund, you can compare the effects of market volatilities on Virtus High and Growth Allocation 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 Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus High and Growth Allocation.
Diversification Opportunities for Virtus High and Growth Allocation
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and Growth is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Virtus High Yield and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation 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 Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Virtus High i.e., Virtus High and Growth Allocation go up and down completely randomly.
Pair Corralation between Virtus High and Growth Allocation
Assuming the 90 days horizon Virtus High is expected to generate 1.52 times less return on investment than Growth Allocation. But when comparing it to its historical volatility, Virtus High Yield is 1.97 times less risky than Growth Allocation. It trades about 0.14 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 987.00 in Growth Allocation Fund on November 29, 2024 and sell it today you would earn a total of 323.00 from holding Growth Allocation Fund or generate 32.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus High Yield vs. Growth Allocation Fund
Performance |
| Timeline |
| Virtus High Yield |
| Growth Allocation |
Virtus High and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus High and Growth Allocation
The main advantage of trading using opposite Virtus High and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus High position performs unexpectedly, Growth Allocation 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 Growth Allocation will offset losses from the drop in Growth Allocation's long position.| Virtus High vs. Aqr Risk Parity | Virtus High vs. Virtus High Yield | Virtus High vs. Metropolitan West High | Virtus High vs. Siit High Yield |
| Growth Allocation vs. Ab Bond Inflation | Growth Allocation vs. Flexible Bond Portfolio | Growth Allocation vs. Old Westbury Municipal | Growth Allocation vs. Goldman Sachs Bond |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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