Correlation Between American Funds and Virtus Multi
Can any of the company-specific risk be diversified away by investing in both American Funds and Virtus Multi 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 Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2025 and Virtus Multi Sector Short, you can compare the effects of market volatilities on American Funds and Virtus Multi 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 Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Virtus Multi.
Diversification Opportunities for American Funds and Virtus Multi
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Virtus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2025 and Virtus Multi Sector Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Sector 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 2025 are associated (or correlated) with Virtus Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Sector has no effect on the direction of American Funds i.e., American Funds and Virtus Multi go up and down completely randomly.
Pair Corralation between American Funds and Virtus Multi
Assuming the 90 days horizon American Funds 2025 is expected to generate 2.48 times more return on investment than Virtus Multi. However, American Funds is 2.48 times more volatile than Virtus Multi Sector Short. It trades about 0.1 of its potential returns per unit of risk. Virtus Multi Sector Short is currently generating about 0.17 per unit of risk. If you would invest 1,404 in American Funds 2025 on September 12, 2024 and sell it today you would earn a total of 225.00 from holding American Funds 2025 or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
American Funds 2025 vs. Virtus Multi Sector Short
Performance |
| Timeline |
| American Funds 2025 |
| Virtus Multi Sector |
American Funds and Virtus Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Virtus Multi
The main advantage of trading using opposite American Funds and Virtus Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Virtus Multi 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 Multi will offset losses from the drop in Virtus Multi's long position.| American Funds vs. Virtus Multi Sector Short | American Funds vs. Alpine Ultra Short | American Funds vs. Franklin Federal Limited Term | American Funds vs. Lord Abbett Short |
| Virtus Multi vs. SCOR PK | Virtus Multi vs. Morningstar Unconstrained Allocation | Virtus Multi vs. Via Renewables | Virtus Multi vs. Bondbloxx ETF Trust |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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