Correlation Between Virtus Nfj and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Virtus Nfj and Financial Industries 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 Nfj and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Nfj Large Cap and Financial Industries Fund, you can compare the effects of market volatilities on Virtus Nfj and Financial Industries 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 Nfj with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Nfj and Financial Industries.
Diversification Opportunities for Virtus Nfj and Financial Industries
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and Financial is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Nfj Large Cap and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Virtus Nfj 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 Nfj Large Cap are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Virtus Nfj i.e., Virtus Nfj and Financial Industries go up and down completely randomly.
Pair Corralation between Virtus Nfj and Financial Industries
Assuming the 90 days horizon Virtus Nfj is expected to generate 1.27 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Virtus Nfj Large Cap is 1.24 times less risky than Financial Industries. It trades about 0.07 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,456 in Financial Industries Fund on September 14, 2024 and sell it today you would earn a total of 593.00 from holding Financial Industries Fund or generate 40.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Virtus Nfj Large Cap vs. Financial Industries Fund
Performance |
| Timeline |
| Virtus Nfj Large |
| Financial Industries |
Virtus Nfj and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Nfj and Financial Industries
The main advantage of trading using opposite Virtus Nfj and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Nfj position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Virtus Nfj vs. Lgm Risk Managed | Virtus Nfj vs. Ab Global Risk | Virtus Nfj vs. Fa 529 Aggressive | Virtus Nfj vs. Calvert High Yield |
| Financial Industries vs. M Large Cap | Financial Industries vs. Virtus Nfj Large Cap | Financial Industries vs. Qs Large Cap | Financial Industries vs. Pace Large Value |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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