Correlation Between Stone Ridge and Virtus Multi
Can any of the company-specific risk be diversified away by investing in both Stone Ridge 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 Stone Ridge and Virtus Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Ridge Diversified and Virtus Multi Sector Short, you can compare the effects of market volatilities on Stone Ridge 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 Stone Ridge with a short position of Virtus Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Virtus Multi.
Diversification Opportunities for Stone Ridge and Virtus Multi
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stone and Virtus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified 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 Stone Ridge 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 Stone Ridge Diversified 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 Stone Ridge i.e., Stone Ridge and Virtus Multi go up and down completely randomly.
Pair Corralation between Stone Ridge and Virtus Multi
Assuming the 90 days horizon Stone Ridge is expected to generate 1.75 times less return on investment than Virtus Multi. In addition to that, Stone Ridge is 1.21 times more volatile than Virtus Multi Sector Short. It trades about 0.13 of its total potential returns per unit of risk. Virtus Multi Sector Short is currently generating about 0.27 per unit of volatility. If you would invest 452.00 in Virtus Multi Sector Short on October 22, 2024 and sell it today you would earn a total of 3.00 from holding Virtus Multi Sector Short or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Virtus Multi Sector Short
Performance |
| Timeline |
| Stone Ridge Diversified |
| Virtus Multi Sector |
Stone Ridge and Virtus Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Virtus Multi
The main advantage of trading using opposite Stone Ridge and Virtus Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge 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.| Stone Ridge vs. Virtus Multi Sector Short | Stone Ridge vs. Delaware Investments Ultrashort | Stone Ridge vs. Transamerica Short Term Bond | Stone Ridge vs. Oakhurst Short Duration |
| Virtus Multi vs. Financial Industries Fund | Virtus Multi vs. Hennessy Small Cap | Virtus Multi vs. Angel Oak Financial | Virtus Multi vs. Blackrock Financial Institutions |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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