Correlation Between Virtus Seix and Small Cap
Can any of the company-specific risk be diversified away by investing in both Virtus Seix and Small 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 Small 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 Small Cap Core, you can compare the effects of market volatilities on Virtus Seix and Small 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Seix and Small Cap.
Diversification Opportunities for Virtus Seix and Small Cap
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virtus and Small is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Seix Government and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Virtus Seix i.e., Virtus Seix and Small Cap go up and down completely randomly.
Pair Corralation between Virtus Seix and Small Cap
Assuming the 90 days horizon Virtus Seix is expected to generate 22.22 times less return on investment than Small Cap. But when comparing it to its historical volatility, Virtus Seix Government is 17.72 times less risky than Small Cap. It trades about 0.15 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,393 in Small Cap Core on August 28, 2024 and sell it today you would earn a total of 93.00 from holding Small Cap Core or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Seix Government vs. Small Cap Core
Performance |
| Timeline |
| Virtus Seix Government |
| Small Cap Core |
Virtus Seix and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Seix and Small Cap
The main advantage of trading using opposite Virtus Seix and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Seix position performs unexpectedly, Small 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 Small Cap will offset losses from the drop in Small Cap's long position.| Virtus Seix vs. Virtus Global Real | Virtus Seix vs. Allianzgi Mid Cap Fund | Virtus Seix vs. Virtus Select Mlp | Virtus Seix vs. Virtus Rampart Enhanced |
| Small Cap vs. Pro Blend Moderate Term | Small Cap vs. Hartford Moderate Allocation | Small Cap vs. Qs Moderate Growth | Small Cap vs. Dimensional Retirement Income |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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