Correlation Between Virtus Convertible and Extended Market
Can any of the company-specific risk be diversified away by investing in both Virtus Convertible and Extended Market 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 Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Convertible and Extended Market Index, you can compare the effects of market volatilities on Virtus Convertible and Extended Market 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 Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Convertible and Extended Market.
Diversification Opportunities for Virtus Convertible and Extended Market
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Virtus and Extended is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Extended Market go up and down completely randomly.
Pair Corralation between Virtus Convertible and Extended Market
Assuming the 90 days horizon Virtus Convertible is expected to generate 0.49 times more return on investment than Extended Market. However, Virtus Convertible is 2.05 times less risky than Extended Market. It trades about 0.07 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.03 per unit of risk. If you would invest 2,949 in Virtus Convertible on October 21, 2024 and sell it today you would earn a total of 647.00 from holding Virtus Convertible or generate 21.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Convertible vs. Extended Market Index
Performance |
| Timeline |
| Virtus Convertible |
| Extended Market Index |
Virtus Convertible and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Convertible and Extended Market
The main advantage of trading using opposite Virtus Convertible and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Convertible position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Virtus Convertible vs. Lord Abbett Small | Virtus Convertible vs. Victory Rs Partners | Virtus Convertible vs. Heartland Value Plus | Virtus Convertible vs. Small Cap Value Fund |
| Extended Market vs. Lord Abbett Vertible | Extended Market vs. Absolute Convertible Arbitrage | Extended Market vs. Virtus Convertible | Extended Market vs. Calamos Vertible Fund |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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