Correlation Between Virtus Seix and Mid Cap

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Can any of the company-specific risk be diversified away by investing in both Virtus Seix and Mid Cap 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 Virtus Seix and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Seix Government and Mid Cap Growth, you can compare the effects of market volatilities on Virtus Seix and Mid Cap 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 Virtus Seix with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Seix and Mid Cap.

Diversification Opportunities for Virtus Seix and Mid Cap

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Virtus and Mid is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Seix Government and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Virtus Seix 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 Virtus Seix Government are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Virtus Seix i.e., Virtus Seix and Mid Cap go up and down completely randomly.

Pair Corralation between Virtus Seix and Mid Cap

Assuming the 90 days horizon Virtus Seix is expected to generate 8.91 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Virtus Seix Government is 21.58 times less risky than Mid Cap. It trades about 0.22 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Mid Cap Growth on September 12, 2024 and sell it today you would earn a total of  667.00  from holding Mid Cap Growth or generate 125.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Virtus Seix Government  vs.  Mid Cap Growth

 Performance 
       Timeline  
Virtus Seix Government 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Seix Government are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Virtus Seix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mid Cap Growth 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Mid Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Virtus Seix and Mid Cap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Virtus Seix and Mid Cap

The main advantage of trading using opposite Virtus Seix and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Seix position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.
The idea behind Virtus Seix Government and Mid Cap Growth 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.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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