Correlation Between Virtus Dfa and Westwood Smidcap
Can any of the company-specific risk be diversified away by investing in both Virtus Dfa and Westwood Smidcap 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 Westwood Smidcap 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 Westwood Smidcap Fund, you can compare the effects of market volatilities on Virtus Dfa and Westwood Smidcap 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 Westwood Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and Westwood Smidcap.
Diversification Opportunities for Virtus Dfa and Westwood Smidcap
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virtus and Westwood is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 and Westwood Smidcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Smidcap 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 Westwood Smidcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Smidcap has no effect on the direction of Virtus Dfa i.e., Virtus Dfa and Westwood Smidcap go up and down completely randomly.
Pair Corralation between Virtus Dfa and Westwood Smidcap
Assuming the 90 days horizon Virtus Dfa is expected to generate 1.74 times less return on investment than Westwood Smidcap. But when comparing it to its historical volatility, Virtus Dfa 2040 is 2.7 times less risky than Westwood Smidcap. It trades about 0.4 of its potential returns per unit of risk. Westwood Smidcap Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,613 in Westwood Smidcap Fund on September 4, 2024 and sell it today you would earn a total of 119.00 from holding Westwood Smidcap Fund or generate 7.38% 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. Westwood Smidcap Fund
Performance |
| Timeline |
| Virtus Dfa 2040 |
| Westwood Smidcap |
Virtus Dfa and Westwood Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Dfa and Westwood Smidcap
The main advantage of trading using opposite Virtus Dfa and Westwood Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Dfa position performs unexpectedly, Westwood Smidcap 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 Westwood Smidcap will offset losses from the drop in Westwood Smidcap's long position.| Virtus Dfa vs. Virtus Multi Strategy Target | Virtus Dfa vs. Virtus Multi Sector Short | Virtus Dfa vs. Ridgeworth Innovative Growth | Virtus Dfa vs. Ridgeworth Seix Total |
| Westwood Smidcap vs. Matson Money Equity | Westwood Smidcap vs. Franklin Government Money | Westwood Smidcap vs. Lord Abbett Emerging | Westwood Smidcap vs. Janus Investment |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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