Correlation Between Virtus Multi-strategy and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Virtus Multi-strategy and Templeton Foreign 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 Templeton Foreign 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 Templeton Foreign Fund, you can compare the effects of market volatilities on Virtus Multi-strategy and Templeton Foreign 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 Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Multi-strategy and Templeton Foreign.
Diversification Opportunities for Virtus Multi-strategy and Templeton Foreign
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Virtus and Templeton is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Strategy Target and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Virtus Multi-strategy i.e., Virtus Multi-strategy and Templeton Foreign go up and down completely randomly.
Pair Corralation between Virtus Multi-strategy and Templeton Foreign
Assuming the 90 days horizon Virtus Multi Strategy Target is expected to generate 0.18 times more return on investment than Templeton Foreign. However, Virtus Multi Strategy Target is 5.48 times less risky than Templeton Foreign. It trades about -0.33 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about -0.36 per unit of risk. If you would invest 1,818 in Virtus Multi Strategy Target on October 12, 2024 and sell it today you would lose (20.00) from holding Virtus Multi Strategy Target or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Multi Strategy Target vs. Templeton Foreign Fund
Performance |
| Timeline |
| Virtus Multi Strategy |
| Templeton Foreign |
Virtus Multi-strategy and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Multi-strategy and Templeton Foreign
The main advantage of trading using opposite Virtus Multi-strategy and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Multi-strategy position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign's long position.The idea behind Virtus Multi Strategy Target and Templeton Foreign 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.
| Templeton Foreign vs. Virtus Multi Strategy Target | Templeton Foreign vs. Ashmore Emerging Markets | Templeton Foreign vs. Artisan Developing World | Templeton Foreign vs. Dow 2x 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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