Correlation Between American Funds and Virtus Seix
Can any of the company-specific risk be diversified away by investing in both American Funds and Virtus Seix 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 American Funds and Virtus Seix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2060 and Virtus Seix Government, you can compare the effects of market volatilities on American Funds and Virtus Seix 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 American Funds with a short position of Virtus Seix. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Virtus Seix.
Diversification Opportunities for American Funds and Virtus Seix
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Virtus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2060 and Virtus Seix Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Seix Government and American Funds 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 American Funds 2060 are associated (or correlated) with Virtus Seix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Seix Government has no effect on the direction of American Funds i.e., American Funds and Virtus Seix go up and down completely randomly.
Pair Corralation between American Funds and Virtus Seix
Assuming the 90 days horizon American Funds 2060 is expected to generate 8.1 times more return on investment than Virtus Seix. However, American Funds is 8.1 times more volatile than Virtus Seix Government. It trades about 0.12 of its potential returns per unit of risk. Virtus Seix Government is currently generating about 0.23 per unit of risk. If you would invest 1,500 in American Funds 2060 on September 4, 2024 and sell it today you would earn a total of 397.00 from holding American Funds 2060 or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2060 vs. Virtus Seix Government
Performance |
| Timeline |
| American Funds 2060 |
| Virtus Seix Government |
American Funds and Virtus Seix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Virtus Seix
The main advantage of trading using opposite American Funds and Virtus Seix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Virtus Seix 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 Seix will offset losses from the drop in Virtus Seix's long position.| American Funds vs. Small Pany Growth | American Funds vs. Touchstone Small Cap | American Funds vs. Champlain Small | American Funds vs. Us Small Cap |
| Virtus Seix vs. Virtus Global Real | Virtus Seix vs. Allianzgi Mid Cap Fund | Virtus Seix vs. Virtus Select Mlp | Virtus Seix vs. Virtus Rampart Enhanced |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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