Correlation Between Virtus Convertible and Pax Small
Can any of the company-specific risk be diversified away by investing in both Virtus Convertible and Pax Small 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 Pax Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Convertible and Pax Small Cap, you can compare the effects of market volatilities on Virtus Convertible and Pax Small 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 Pax Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Convertible and Pax Small.
Diversification Opportunities for Virtus Convertible and Pax Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virtus and Pax is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Pax Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Small Cap 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 Pax Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Small Cap has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Pax Small go up and down completely randomly.
Pair Corralation between Virtus Convertible and Pax Small
Assuming the 90 days horizon Virtus Convertible is expected to generate 1.26 times less return on investment than Pax Small. But when comparing it to its historical volatility, Virtus Convertible is 1.84 times less risky than Pax Small. It trades about 0.11 of its potential returns per unit of risk. Pax Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,488 in Pax Small Cap on September 12, 2024 and sell it today you would earn a total of 441.00 from holding Pax Small Cap or generate 29.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Convertible vs. Pax Small Cap
Performance |
| Timeline |
| Virtus Convertible |
| Pax Small Cap |
Virtus Convertible and Pax Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Convertible and Pax Small
The main advantage of trading using opposite Virtus Convertible and Pax Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Convertible position performs unexpectedly, Pax Small 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 Pax Small will offset losses from the drop in Pax Small's long position.| Virtus Convertible vs. Acm Dynamic Opportunity | Virtus Convertible vs. Leggmason Partners Institutional | Virtus Convertible vs. Arrow Managed Futures | Virtus Convertible vs. Volumetric Fund Volumetric |
| Pax Small vs. Locorr Dynamic Equity | Pax Small vs. Calamos Global Equity | Pax Small vs. Us Strategic Equity | Pax Small vs. Touchstone International Equity |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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