Correlation Between Virtus Kar and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Virtus Kar and Dow Jones 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 Kar and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Kar Small Cap and Dow Jones Industrial, you can compare the effects of market volatilities on Virtus Kar and Dow Jones 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 Kar with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Dow Jones.
Diversification Opportunities for Virtus Kar and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virtus and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Virtus Kar 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 Kar Small Cap are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Virtus Kar i.e., Virtus Kar and Dow Jones go up and down completely randomly.
Pair Corralation between Virtus Kar and Dow Jones
Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 1.37 times more return on investment than Dow Jones. However, Virtus Kar is 1.37 times more volatile than Dow Jones Industrial. It trades about 0.34 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 5,347 in Virtus Kar Small Cap on August 29, 2024 and sell it today you would earn a total of 550.00 from holding Virtus Kar Small Cap or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Kar Small Cap vs. Dow Jones Industrial
Performance |
| Timeline |
Virtus Kar and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Virtus Kar Small Cap
Pair trading matchups for Virtus Kar
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Virtus Kar and Dow Jones
The main advantage of trading using opposite Virtus Kar and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Kar position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus International Small Cap | Virtus Kar vs. Fuller Thaler Behavioral |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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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