Correlation Between Virtus Convertible and Western Asset
Can any of the company-specific risk be diversified away by investing in both Virtus Convertible and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Convertible and Western Asset Inflation, you can compare the effects of market volatilities on Virtus Convertible and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Convertible and Western Asset.
Diversification Opportunities for Virtus Convertible and Western Asset
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Virtus and Western is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Western Asset go up and down completely randomly.
Pair Corralation between Virtus Convertible and Western Asset
Assuming the 90 days horizon Virtus Convertible is expected to generate 1.95 times more return on investment than Western Asset. However, Virtus Convertible is 1.95 times more volatile than Western Asset Inflation. It trades about 0.2 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.07 per unit of risk. If you would invest 3,204 in Virtus Convertible on September 1, 2024 and sell it today you would earn a total of 532.00 from holding Virtus Convertible or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Virtus Convertible vs. Western Asset Inflation
Performance |
| Timeline |
| Virtus Convertible |
| Western Asset Inflation |
Virtus Convertible and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Convertible and Western Asset
The main advantage of trading using opposite Virtus Convertible and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Convertible position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Virtus Convertible vs. Metropolitan West High | Virtus Convertible vs. Pace High Yield | Virtus Convertible vs. Valic Company I | Virtus Convertible vs. Alpine High Yield |
| Western Asset vs. Legg Mason Partners | Western Asset vs. Artisan Small Cap | Western Asset vs. Growth Opportunities Fund | Western Asset vs. Small Midcap Dividend 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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