Correlation Between Virtus Dfa and American Funds
Can any of the company-specific risk be diversified away by investing in both Virtus Dfa and American Funds 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 Dfa and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Dfa 2040 and American Funds American, you can compare the effects of market volatilities on Virtus Dfa and American Funds 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 Dfa with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and American Funds.
Diversification Opportunities for Virtus Dfa and American Funds
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virtus and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 and American Funds American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds American and Virtus Dfa 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 Dfa 2040 are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds American has no effect on the direction of Virtus Dfa i.e., Virtus Dfa and American Funds go up and down completely randomly.
Pair Corralation between Virtus Dfa and American Funds
Assuming the 90 days horizon Virtus Dfa 2040 is expected to generate 1.24 times more return on investment than American Funds. However, Virtus Dfa is 1.24 times more volatile than American Funds American. It trades about 0.11 of its potential returns per unit of risk. American Funds American is currently generating about 0.1 per unit of risk. If you would invest 866.00 in Virtus Dfa 2040 on September 3, 2024 and sell it today you would earn a total of 350.00 from holding Virtus Dfa 2040 or generate 40.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Dfa 2040 vs. American Funds American
Performance |
| Timeline |
| Virtus Dfa 2040 |
| American Funds American |
Virtus Dfa and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Dfa and American Funds
The main advantage of trading using opposite Virtus Dfa and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Dfa position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Virtus Dfa vs. American Funds American | Virtus Dfa vs. American Funds American | Virtus Dfa vs. American Balanced | Virtus Dfa vs. American Balanced Fund |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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