Correlation Between Retail Estates and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both Retail Estates and Virtus Investment 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 Retail Estates and Virtus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Virtus Investment Partners, you can compare the effects of market volatilities on Retail Estates and Virtus Investment 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 Retail Estates with a short position of Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Virtus Investment.
Diversification Opportunities for Retail Estates and Virtus Investment
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and Virtus is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment and Retail Estates 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 Retail Estates NV are associated (or correlated) with Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Retail Estates i.e., Retail Estates and Virtus Investment go up and down completely randomly.
Pair Corralation between Retail Estates and Virtus Investment
Assuming the 90 days horizon Retail Estates is expected to generate 1.74 times less return on investment than Virtus Investment. But when comparing it to its historical volatility, Retail Estates NV is 1.49 times less risky than Virtus Investment. It trades about 0.04 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 16,773 in Virtus Investment Partners on August 30, 2024 and sell it today you would earn a total of 6,427 from holding Virtus Investment Partners or generate 38.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. Virtus Investment Partners
Performance |
| Timeline |
| Retail Estates NV |
| Virtus Investment |
Retail Estates and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Virtus Investment
The main advantage of trading using opposite Retail Estates and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, Virtus Investment 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 Investment will offset losses from the drop in Virtus Investment's long position.| Retail Estates vs. Simon Property Group | Retail Estates vs. Realty Income | Retail Estates vs. Kimco Realty | Retail Estates vs. Range Resources Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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