Correlation Between Virtus Emerging and Virtus International
Can any of the company-specific risk be diversified away by investing in both Virtus Emerging and Virtus International 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 Emerging and Virtus International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Emerging Markets and Virtus International Small Cap, you can compare the effects of market volatilities on Virtus Emerging and Virtus International 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 Emerging with a short position of Virtus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Emerging and Virtus International.
Diversification Opportunities for Virtus Emerging and Virtus International
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and Virtus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Emerging Markets and Virtus International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus International and Virtus Emerging 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 Emerging Markets are associated (or correlated) with Virtus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus International has no effect on the direction of Virtus Emerging i.e., Virtus Emerging and Virtus International go up and down completely randomly.
Pair Corralation between Virtus Emerging and Virtus International
Assuming the 90 days horizon Virtus Emerging Markets is expected to under-perform the Virtus International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Emerging Markets is 1.54 times less risky than Virtus International. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Virtus International Small Cap is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,943 in Virtus International Small Cap on September 2, 2024 and sell it today you would lose (25.00) from holding Virtus International Small Cap or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Emerging Markets vs. Virtus International Small Cap
Performance |
| Timeline |
| Virtus Emerging Markets |
| Virtus International |
Virtus Emerging and Virtus International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Emerging and Virtus International
The main advantage of trading using opposite Virtus Emerging and Virtus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Emerging position performs unexpectedly, Virtus International 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 Virtus International will offset losses from the drop in Virtus International's long position.| Virtus Emerging vs. Virtus International Small Cap | Virtus Emerging vs. International Advantage Portfolio | Virtus Emerging vs. Artisan Developing World | Virtus Emerging vs. Virtus Kar Small Cap |
| Virtus International vs. Virtus Kar Small Cap | Virtus International vs. Federated Mdt Small | Virtus International vs. Fidelity International Small |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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