Correlation Between Virtus Multi-strategy and Virtus Multi-sector
Can any of the company-specific risk be diversified away by investing in both Virtus Multi-strategy and Virtus Multi-sector 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 Virtus Multi-sector 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 Virtus Multi Sector Short, you can compare the effects of market volatilities on Virtus Multi-strategy and Virtus Multi-sector 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 Virtus Multi-sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Multi-strategy and Virtus Multi-sector.
Diversification Opportunities for Virtus Multi-strategy and Virtus Multi-sector
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and VIRTUS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Strategy Target and Virtus Multi Sector Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Sector 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 Virtus Multi-sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Sector has no effect on the direction of Virtus Multi-strategy i.e., Virtus Multi-strategy and Virtus Multi-sector go up and down completely randomly.
Pair Corralation between Virtus Multi-strategy and Virtus Multi-sector
Assuming the 90 days horizon Virtus Multi Strategy Target is expected to under-perform the Virtus Multi-sector. In addition to that, Virtus Multi-strategy is 1.35 times more volatile than Virtus Multi Sector Short. It trades about -0.05 of its total potential returns per unit of risk. Virtus Multi Sector Short is currently generating about -0.07 per unit of volatility. If you would invest 460.00 in Virtus Multi Sector Short on August 29, 2024 and sell it today you would lose (2.00) from holding Virtus Multi Sector Short or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Virtus Multi Strategy Target vs. Virtus Multi Sector Short
Performance |
| Timeline |
| Virtus Multi Strategy |
| Virtus Multi Sector |
Virtus Multi-strategy and Virtus Multi-sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Multi-strategy and Virtus Multi-sector
The main advantage of trading using opposite Virtus Multi-strategy and Virtus Multi-sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Multi-strategy position performs unexpectedly, Virtus Multi-sector 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 Multi-sector will offset losses from the drop in Virtus Multi-sector's long position.The idea behind Virtus Multi Strategy Target and Virtus Multi Sector Short 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.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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