Correlation Between Virtus Convertible and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Virtus Convertible and Diamond Hill 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 Convertible and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Convertible and Diamond Hill Mid, you can compare the effects of market volatilities on Virtus Convertible and Diamond Hill 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 Convertible with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Convertible and Diamond Hill.
Diversification Opportunities for Virtus Convertible and Diamond Hill
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and Diamond is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Diamond Hill Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Mid and Virtus Convertible 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 Convertible are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Mid has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Diamond Hill go up and down completely randomly.
Pair Corralation between Virtus Convertible and Diamond Hill
Assuming the 90 days horizon Virtus Convertible is expected to generate 0.65 times more return on investment than Diamond Hill. However, Virtus Convertible is 1.54 times less risky than Diamond Hill. It trades about 0.15 of its potential returns per unit of risk. Diamond Hill Mid is currently generating about 0.09 per unit of risk. If you would invest 3,004 in Virtus Convertible on September 4, 2024 and sell it today you would earn a total of 718.00 from holding Virtus Convertible or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Convertible vs. Diamond Hill Mid
Performance |
| Timeline |
| Virtus Convertible |
| Diamond Hill Mid |
Virtus Convertible and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Convertible and Diamond Hill
The main advantage of trading using opposite Virtus Convertible and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Convertible position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Virtus Convertible vs. Gmo High Yield | Virtus Convertible vs. Pace High Yield | Virtus Convertible vs. Calvert High Yield | Virtus Convertible vs. Pgim High Yield |
| Diamond Hill vs. Absolute Convertible Arbitrage | Diamond Hill vs. Fidelity Sai Convertible | Diamond Hill vs. Lord Abbett Convertible | Diamond Hill vs. Virtus Convertible |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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