Correlation Between S A P and Virtus Investment

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both S A P 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 S A P and Virtus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Virtus Investment Partners, you can compare the effects of market volatilities on S A P 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 S A P with a short position of Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Virtus Investment.

Diversification Opportunities for S A P and Virtus Investment

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between SAP and Virtus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment and S A P 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 SAP SE 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 S A P i.e., S A P and Virtus Investment go up and down completely randomly.

Pair Corralation between S A P and Virtus Investment

Assuming the 90 days trading horizon SAP SE is expected to generate 0.7 times more return on investment than Virtus Investment. However, SAP SE is 1.42 times less risky than Virtus Investment. It trades about 0.13 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.03 per unit of risk. If you would invest  10,583  in SAP SE on October 9, 2024 and sell it today you would earn a total of  13,342  from holding SAP SE or generate 126.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SAP SE  vs.  Virtus Investment Partners

 Performance 
       Timeline  
SAP SE 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, S A P unveiled solid returns over the last few months and may actually be approaching a breakup point.
Virtus Investment 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

S A P and Virtus Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with S A P and Virtus Investment

The main advantage of trading using opposite S A P and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P 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.
The idea behind SAP SE and Virtus Investment Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Transaction History
View history of all your transactions and understand their impact on performance
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios