Correlation Between Virtus International and International Advantage
Can any of the company-specific risk be diversified away by investing in both Virtus International and International Advantage 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 International and International Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus International Small Cap and International Advantage Portfolio, you can compare the effects of market volatilities on Virtus International and International Advantage 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 International with a short position of International Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus International and International Advantage.
Diversification Opportunities for Virtus International and International Advantage
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and International is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Virtus International Small Cap and International Advantage Portfo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Advantage and Virtus International 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 International Small Cap are associated (or correlated) with International Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Advantage has no effect on the direction of Virtus International i.e., Virtus International and International Advantage go up and down completely randomly.
Pair Corralation between Virtus International and International Advantage
Assuming the 90 days horizon Virtus International Small Cap is expected to under-perform the International Advantage. In addition to that, Virtus International is 1.12 times more volatile than International Advantage Portfolio. It trades about -0.17 of its total potential returns per unit of risk. International Advantage Portfolio is currently generating about -0.01 per unit of volatility. If you would invest 2,362 in International Advantage Portfolio on August 31, 2024 and sell it today you would lose (4.00) from holding International Advantage Portfolio or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus International Small Cap vs. International Advantage Portfo
Performance |
| Timeline |
| Virtus International |
| International Advantage |
Virtus International and International Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus International and International Advantage
The main advantage of trading using opposite Virtus International and International Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus International position performs unexpectedly, International Advantage 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 International Advantage will offset losses from the drop in International Advantage's long position.| Virtus International vs. Motorola Solutions | Virtus International vs. MOTOROLA SOLTN | Virtus International vs. Eaton Vance Large Cap |
| International Advantage vs. Europacific Growth Fund | International Advantage vs. Europacific Growth Fund | International Advantage vs. HUMANA INC | International Advantage vs. Aquagold International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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