Correlation Between Dow 2x and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Virtus Kar 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 Dow 2x and Virtus Kar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Virtus Kar Mid Cap, you can compare the effects of market volatilities on Dow 2x and Virtus Kar 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 Dow 2x with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Virtus Kar.
Diversification Opportunities for Dow 2x and Virtus Kar
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Virtus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Virtus Kar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Mid and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Mid has no effect on the direction of Dow 2x i.e., Dow 2x and Virtus Kar go up and down completely randomly.
Pair Corralation between Dow 2x and Virtus Kar
Assuming the 90 days horizon Dow 2x Strategy is expected to generate 2.25 times more return on investment than Virtus Kar. However, Dow 2x is 2.25 times more volatile than Virtus Kar Mid Cap. It trades about 0.26 of its potential returns per unit of risk. Virtus Kar Mid Cap is currently generating about 0.19 per unit of risk. If you would invest 14,492 in Dow 2x Strategy on August 28, 2024 and sell it today you would earn a total of 1,647 from holding Dow 2x Strategy or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow 2x Strategy vs. Virtus Kar Mid Cap
Performance |
| Timeline |
| Dow 2x Strategy |
| Virtus Kar Mid |
Dow 2x and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Virtus Kar
The main advantage of trading using opposite Dow 2x and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Virtus Kar 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 Kar will offset losses from the drop in Virtus Kar's long position.| Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Ultramid Cap Profund Ultramid Cap |
| Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus International Small Cap | Virtus Kar vs. Fuller Thaler Behavioral |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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