Correlation Between Xp and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both Xp and Virtus Investment 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 Xp and Virtus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Virtus Investment Partners,, you can compare the effects of market volatilities on Xp and Virtus Investment 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 Xp with a short position of Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Virtus Investment.
Diversification Opportunities for Xp and Virtus Investment
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and Virtus is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Virtus Investment Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment and Xp 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 Xp Inc are associated (or correlated) with Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Xp i.e., Xp and Virtus Investment go up and down completely randomly.
Pair Corralation between Xp and Virtus Investment
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Virtus Investment. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 1.1 times less risky than Virtus Investment. The stock trades about -0.25 of its potential returns per unit of risk. The Virtus Investment Partners, is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 21,299 in Virtus Investment Partners, on August 23, 2024 and sell it today you would earn a total of 2,641 from holding Virtus Investment Partners, or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. Virtus Investment Partners,
Performance |
| Timeline |
| Xp Inc |
| Virtus Investment |
Xp and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Virtus Investment
The main advantage of trading using opposite Xp and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.The idea behind Xp Inc and Virtus Investment Partners, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Virtus Investment vs. Invesco Advantage MIT | Virtus Investment vs. Invesco Municipal Trust | Virtus Investment vs. Invesco California Value | Virtus Investment vs. Tri Continental Closed |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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