Correlation Between Virtus High and Virtus Senior
Can any of the company-specific risk be diversified away by investing in both Virtus High and Virtus Senior 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 Senior 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 Senior Floating, you can compare the effects of market volatilities on Virtus High and Virtus Senior 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 Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus High and Virtus Senior.
Diversification Opportunities for Virtus High and Virtus Senior
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and Virtus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Virtus High Yield and Virtus Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Senior Floating 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 Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Senior Floating has no effect on the direction of Virtus High i.e., Virtus High and Virtus Senior go up and down completely randomly.
Pair Corralation between Virtus High and Virtus Senior
Assuming the 90 days horizon Virtus High is expected to generate 1.32 times less return on investment than Virtus Senior. In addition to that, Virtus High is 4.18 times more volatile than Virtus Senior Floating. It trades about 0.07 of its total potential returns per unit of risk. Virtus Senior Floating is currently generating about 0.4 per unit of volatility. If you would invest 872.00 in Virtus Senior Floating on September 14, 2024 and sell it today you would earn a total of 3.00 from holding Virtus Senior Floating or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus High Yield vs. Virtus Senior Floating
Performance |
| Timeline |
| Virtus High Yield |
| Virtus Senior Floating |
Virtus High and Virtus Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus High and Virtus Senior
The main advantage of trading using opposite Virtus High and Virtus Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus High position performs unexpectedly, Virtus Senior 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 Senior will offset losses from the drop in Virtus Senior's long position.| Virtus High vs. Virtus Multi Strategy Target | Virtus High vs. Virtus Multi Sector Short | Virtus High vs. Ridgeworth Seix High | Virtus High vs. Ridgeworth Innovative Growth |
| Virtus Senior vs. Virtus Multi Strategy Target | Virtus Senior vs. Virtus Multi Sector Short | Virtus Senior vs. Ridgeworth Seix High | Virtus Senior vs. Ridgeworth Innovative Growth |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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