Correlation Between Extended Market and Virtus High
Can any of the company-specific risk be diversified away by investing in both Extended Market and Virtus High 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 Extended Market and Virtus High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Virtus High Yield, you can compare the effects of market volatilities on Extended Market and Virtus High 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 Extended Market with a short position of Virtus High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Virtus High.
Diversification Opportunities for Extended Market and Virtus High
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Extended and Virtus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Virtus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus High Yield and Extended Market 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 Extended Market Index are associated (or correlated) with Virtus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus High Yield has no effect on the direction of Extended Market i.e., Extended Market and Virtus High go up and down completely randomly.
Pair Corralation between Extended Market and Virtus High
Assuming the 90 days horizon Extended Market Index is expected to under-perform the Virtus High. In addition to that, Extended Market is 15.0 times more volatile than Virtus High Yield. It trades about -0.29 of its total potential returns per unit of risk. Virtus High Yield is currently generating about -0.29 per unit of volatility. If you would invest 390.00 in Virtus High Yield on October 11, 2024 and sell it today you would lose (4.00) from holding Virtus High Yield or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Virtus High Yield
Performance |
| Timeline |
| Extended Market Index |
| Virtus High Yield |
Extended Market and Virtus High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Virtus High
The main advantage of trading using opposite Extended Market and Virtus High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Virtus High 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 High will offset losses from the drop in Virtus High's long position.| Extended Market vs. Avantis Large Cap | Extended Market vs. Qs Large Cap | Extended Market vs. M Large Cap | Extended Market vs. Blackrock Large Cap |
| Virtus High vs. Extended Market Index | Virtus High vs. Locorr Market Trend | Virtus High vs. Franklin Emerging Market | Virtus High vs. Pnc Emerging Markets |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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