Correlation Between Virtus High and Northern Emerging
Can any of the company-specific risk be diversified away by investing in both Virtus High and Northern Emerging 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 Northern Emerging 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 Northern Emerging Markets, you can compare the effects of market volatilities on Virtus High and Northern Emerging 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 Northern Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus High and Northern Emerging.
Diversification Opportunities for Virtus High and Northern Emerging
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virtus and Northern is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Virtus High Yield and Northern Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Emerging Markets 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 Northern Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Emerging Markets has no effect on the direction of Virtus High i.e., Virtus High and Northern Emerging go up and down completely randomly.
Pair Corralation between Virtus High and Northern Emerging
Assuming the 90 days horizon Virtus High Yield is expected to generate 0.36 times more return on investment than Northern Emerging. However, Virtus High Yield is 2.78 times less risky than Northern Emerging. It trades about 0.12 of its potential returns per unit of risk. Northern Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 318.00 in Virtus High Yield on August 29, 2024 and sell it today you would earn a total of 64.00 from holding Virtus High Yield or generate 20.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus High Yield vs. Northern Emerging Markets
Performance |
| Timeline |
| Virtus High Yield |
| Northern Emerging Markets |
Virtus High and Northern Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus High and Northern Emerging
The main advantage of trading using opposite Virtus High and Northern Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus High position performs unexpectedly, Northern Emerging 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 Northern Emerging will offset losses from the drop in Northern Emerging's long position.| Virtus High vs. Virtus Multi Strategy Target | Virtus High vs. Virtus Multi Sector Short | Virtus High vs. Ridgeworth Innovative Growth | Virtus High vs. Ridgeworth Seix Porate |
| Northern Emerging vs. Nasdaq 100 2x Strategy | Northern Emerging vs. Rbc Bluebay Emerging | Northern Emerging vs. Dws Emerging Markets | Northern Emerging vs. Siit Emerging Markets |
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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