Correlation Between Virtus Multi-sector and American Beacon
Can any of the company-specific risk be diversified away by investing in both Virtus Multi-sector and American Beacon 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-sector and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Multi Sector Short and American Beacon Balanced, you can compare the effects of market volatilities on Virtus Multi-sector and American Beacon 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-sector with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Multi-sector and American Beacon.
Diversification Opportunities for Virtus Multi-sector and American Beacon
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virtus and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Sector Short and American Beacon Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Balanced and Virtus Multi-sector 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 Sector Short are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Balanced has no effect on the direction of Virtus Multi-sector i.e., Virtus Multi-sector and American Beacon go up and down completely randomly.
Pair Corralation between Virtus Multi-sector and American Beacon
Assuming the 90 days horizon Virtus Multi Sector Short is expected to generate 0.07 times more return on investment than American Beacon. However, Virtus Multi Sector Short is 14.36 times less risky than American Beacon. It trades about 0.26 of its potential returns per unit of risk. American Beacon Balanced is currently generating about -0.16 per unit of risk. If you would invest 452.00 in Virtus Multi Sector Short on October 20, 2024 and sell it today you would earn a total of 3.00 from holding Virtus Multi Sector Short or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Virtus Multi Sector Short vs. American Beacon Balanced
Performance |
| Timeline |
| Virtus Multi Sector |
| American Beacon Balanced |
Virtus Multi-sector and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Multi-sector and American Beacon
The main advantage of trading using opposite Virtus Multi-sector and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Multi-sector position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Virtus Multi-sector vs. Franklin Adjustable Government | Virtus Multi-sector vs. T Rowe Price | Virtus Multi-sector vs. Ishares Municipal Bond | Virtus Multi-sector vs. Dunham Porategovernment Bond |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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