Correlation Between Global X and Virtus Reaves
Can any of the company-specific risk be diversified away by investing in both Global X and Virtus Reaves 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 Global X and Virtus Reaves into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Renewable and Virtus Reaves Utilities, you can compare the effects of market volatilities on Global X and Virtus Reaves 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 Global X with a short position of Virtus Reaves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Virtus Reaves.
Diversification Opportunities for Global X and Virtus Reaves
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Virtus is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global X Renewable and Virtus Reaves Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Reaves Utilities and Global X 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 Global X Renewable are associated (or correlated) with Virtus Reaves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Reaves Utilities has no effect on the direction of Global X i.e., Global X and Virtus Reaves go up and down completely randomly.
Pair Corralation between Global X and Virtus Reaves
Given the investment horizon of 90 days Global X Renewable is expected to under-perform the Virtus Reaves. In addition to that, Global X is 1.08 times more volatile than Virtus Reaves Utilities. It trades about -0.06 of its total potential returns per unit of risk. Virtus Reaves Utilities is currently generating about 0.08 per unit of volatility. If you would invest 4,515 in Virtus Reaves Utilities on August 25, 2024 and sell it today you would earn a total of 2,390 from holding Virtus Reaves Utilities or generate 52.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Renewable vs. Virtus Reaves Utilities
Performance |
| Timeline |
| Global X Renewable |
| Virtus Reaves Utilities |
Global X and Virtus Reaves Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Virtus Reaves
The main advantage of trading using opposite Global X and Virtus Reaves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Virtus Reaves 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 Reaves will offset losses from the drop in Virtus Reaves' long position.| Global X vs. Global X CleanTech | Global X vs. Global X Clean | Global X vs. Global X Wind | Global X vs. Global X Thematic |
| Virtus Reaves vs. Invesco DWA Utilities | Virtus Reaves vs. Invesco SP SmallCap | Virtus Reaves vs. First Trust Utilities | Virtus Reaves vs. iShares Global Utilities |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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