Correlation Between Virtus Multi-strategy and World Energy
Can any of the company-specific risk be diversified away by investing in both Virtus Multi-strategy and World Energy 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 Multi-strategy and World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Multi Strategy Target and World Energy Fund, you can compare the effects of market volatilities on Virtus Multi-strategy and World Energy 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 Multi-strategy with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Multi-strategy and World Energy.
Diversification Opportunities for Virtus Multi-strategy and World Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virtus and World is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Strategy Target and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Virtus Multi-strategy 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 Multi Strategy Target are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Virtus Multi-strategy i.e., Virtus Multi-strategy and World Energy go up and down completely randomly.
Pair Corralation between Virtus Multi-strategy and World Energy
Assuming the 90 days horizon Virtus Multi Strategy Target is expected to under-perform the World Energy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Multi Strategy Target is 6.87 times less risky than World Energy. The mutual fund trades about -0.34 of its potential returns per unit of risk. The World Energy Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,500 in World Energy Fund on October 12, 2024 and sell it today you would earn a total of 9.00 from holding World Energy Fund or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Multi Strategy Target vs. World Energy Fund
Performance |
| Timeline |
| Virtus Multi Strategy |
| World Energy |
Virtus Multi-strategy and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Multi-strategy and World Energy
The main advantage of trading using opposite Virtus Multi-strategy and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Multi-strategy position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.The idea behind Virtus Multi Strategy Target and World Energy Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| World Energy vs. Western Assets Emerging | World Energy vs. Dow 2x Strategy | World Energy vs. Virtus Multi Strategy Target | World Energy vs. Alphacentric Symmetry Strategy |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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