Correlation Between Virtus High and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Virtus High 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 Virtus High and Virtus Kar 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 Virtus Kar Mid Cap, you can compare the effects of market volatilities on Virtus High 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 Virtus High with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus High and Virtus Kar.
Diversification Opportunities for Virtus High and Virtus Kar
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and VIRTUS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Virtus High Yield 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 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 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 Virtus High i.e., Virtus High and Virtus Kar go up and down completely randomly.
Pair Corralation between Virtus High and Virtus Kar
Assuming the 90 days horizon Virtus High is expected to generate 16.94 times less return on investment than Virtus Kar. But when comparing it to its historical volatility, Virtus High Yield is 7.4 times less risky than Virtus Kar. It trades about 0.18 of its potential returns per unit of risk. Virtus Kar Mid Cap is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 4,400 in Virtus Kar Mid Cap on September 1, 2024 and sell it today you would earn a total of 425.00 from holding Virtus Kar Mid Cap or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Virtus High Yield vs. Virtus Kar Mid Cap
Performance |
| Timeline |
| Virtus High Yield |
| Virtus Kar Mid |
Virtus High and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus High and Virtus Kar
The main advantage of trading using opposite Virtus High and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus High 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.| Virtus High vs. Tax Managed Mid Small | Virtus High vs. Pgim Jennison Diversified | Virtus High vs. Harbor Diversified International | Virtus High vs. Davenport Small Cap |
| Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Mid Cap | Virtus Kar vs. Virtus Kar Small Cap |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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