Correlation Between Virtus Emerging and Small Cap
Can any of the company-specific risk be diversified away by investing in both Virtus Emerging and Small Cap 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 Small Cap 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 Small Cap Stock, you can compare the effects of market volatilities on Virtus Emerging and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Emerging and Small Cap.
Diversification Opportunities for Virtus Emerging and Small Cap
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virtus and Small is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Emerging Markets and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Virtus Emerging i.e., Virtus Emerging and Small Cap go up and down completely randomly.
Pair Corralation between Virtus Emerging and Small Cap
Assuming the 90 days horizon Virtus Emerging Markets is expected to generate 0.41 times more return on investment than Small Cap. However, Virtus Emerging Markets is 2.43 times less risky than Small Cap. It trades about -0.06 of its potential returns per unit of risk. Small Cap Stock is currently generating about -0.09 per unit of risk. If you would invest 1,530 in Virtus Emerging Markets on September 12, 2024 and sell it today you would lose (9.00) from holding Virtus Emerging Markets or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Virtus Emerging Markets vs. Small Cap Stock
Performance |
| Timeline |
| Virtus Emerging Markets |
| Small Cap Stock |
Virtus Emerging and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Emerging and Small Cap
The main advantage of trading using opposite Virtus Emerging and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Emerging position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Virtus Emerging vs. Aam Select Income | Virtus Emerging vs. Volumetric Fund Volumetric | Virtus Emerging vs. Fa 529 Aggressive | Virtus Emerging vs. Red Oak Technology |
| Small Cap vs. Shelton Emerging Markets | Small Cap vs. Kinetics Market Opportunities | Small Cap vs. Siit Emerging Markets | Small Cap vs. Investec Emerging Markets |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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