Correlation Between Virtus Ceredex and American High-income
Can any of the company-specific risk be diversified away by investing in both Virtus Ceredex and American High-income 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 Ceredex and American High-income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Ceredex Small Cap and American High Income Municipal, you can compare the effects of market volatilities on Virtus Ceredex and American High-income 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 Ceredex with a short position of American High-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Ceredex and American High-income.
Diversification Opportunities for Virtus Ceredex and American High-income
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virtus and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Ceredex Small Cap and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Virtus Ceredex 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 Ceredex Small Cap are associated (or correlated) with American High-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Virtus Ceredex i.e., Virtus Ceredex and American High-income go up and down completely randomly.
Pair Corralation between Virtus Ceredex and American High-income
Assuming the 90 days horizon Virtus Ceredex Small Cap is expected to generate 3.4 times more return on investment than American High-income. However, Virtus Ceredex is 3.4 times more volatile than American High Income Municipal. It trades about 0.12 of its potential returns per unit of risk. American High Income Municipal is currently generating about 0.01 per unit of risk. If you would invest 741.00 in Virtus Ceredex Small Cap on November 4, 2024 and sell it today you would earn a total of 14.00 from holding Virtus Ceredex Small Cap or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Ceredex Small Cap vs. American High Income Municipal
Performance |
| Timeline |
| Virtus Ceredex Small |
| American High Income |
Virtus Ceredex and American High-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Ceredex and American High-income
The main advantage of trading using opposite Virtus Ceredex and American High-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Ceredex position performs unexpectedly, American High-income 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 High-income will offset losses from the drop in American High-income's long position.| Virtus Ceredex vs. Virtus Kar Small Cap | Virtus Ceredex vs. Virtus Kar Mid Cap | Virtus Ceredex vs. Virtus International Small Cap | Virtus Ceredex vs. Virtus Kar Small Cap |
| American High-income vs. Prudential Financial Services | American High-income vs. Gabelli Global Financial | American High-income vs. Ab Government Exchange | American High-income vs. Chestnut Street Exchange |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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