Correlation Between Virtus Multi and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Virtus Multi and Stone Ridge 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 and Stone Ridge 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 Stone Ridge Diversified, you can compare the effects of market volatilities on Virtus Multi and Stone Ridge 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 with a short position of Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Multi and Stone Ridge.
Diversification Opportunities for Virtus Multi and Stone Ridge
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and Stone is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Sector Short and Stone Ridge Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge Diversified and Virtus Multi 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge Diversified has no effect on the direction of Virtus Multi i.e., Virtus Multi and Stone Ridge go up and down completely randomly.
Pair Corralation between Virtus Multi and Stone Ridge
Assuming the 90 days horizon Virtus Multi is expected to generate 2.68 times less return on investment than Stone Ridge. But when comparing it to its historical volatility, Virtus Multi Sector Short is 1.42 times less risky than Stone Ridge. It trades about 0.13 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,033 in Stone Ridge Diversified on October 22, 2024 and sell it today you would earn a total of 31.00 from holding Stone Ridge Diversified or generate 3.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Virtus Multi Sector Short vs. Stone Ridge Diversified
Performance |
Timeline |
Virtus Multi Sector |
Stone Ridge Diversified |
Virtus Multi and Stone Ridge Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Virtus Multi and Stone Ridge
The main advantage of trading using opposite Virtus Multi and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Multi position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.Virtus Multi vs. Financial Industries Fund | Virtus Multi vs. Hennessy Small Cap | Virtus Multi vs. Angel Oak Financial | Virtus Multi vs. Blackrock Financial Institutions |
Stone Ridge vs. Virtus Multi Sector Short | Stone Ridge vs. Delaware Investments Ultrashort | Stone Ridge vs. Transamerica Short Term Bond | Stone Ridge vs. Oakhurst Short Duration |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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