Correlation Between Abr Enhanced and Virtus Convertible

Can any of the company-specific risk be diversified away by investing in both Abr Enhanced and Virtus Convertible 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 Abr Enhanced and Virtus Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abr Enhanced Short and Virtus Convertible, you can compare the effects of market volatilities on Abr Enhanced and Virtus Convertible 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 Abr Enhanced with a short position of Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abr Enhanced and Virtus Convertible.

Diversification Opportunities for Abr Enhanced and Virtus Convertible

0.77

Correlation Coefficient

Abr Enhanced  Virtus Convertible

Poor diversification

The 3 months correlation between Abr and Virtus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Abr Enhanced Short and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Abr Enhanced 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 Abr Enhanced Short are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Abr Enhanced i.e., Abr Enhanced and Virtus Convertible go up and down completely randomly.

Pair Corralation between Abr Enhanced and Virtus Convertible

Assuming the 90 days horizon Abr Enhanced Short is expected to generate 1.87 times more return on investment than Virtus Convertible. However, Abr Enhanced is 1.87 times more volatile than Virtus Convertible. It trades about 0.45 of its potential returns per unit of risk. Virtus Convertible is currently generating about 0.64 per unit of risk. If you would invest  782.00  in Abr Enhanced Short on September 5, 2024 and sell it today you would earn a total of  87.00  from holding Abr Enhanced Short or generate 11.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Abr Enhanced Short  vs.  Virtus Convertible

Abr Enhanced Short

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abr Enhanced Short are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Abr Enhanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Virtus Convertible

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Virtus Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Abr Enhanced and Virtus Convertible

The main advantage of trading using opposite Abr Enhanced and Virtus Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abr Enhanced position performs unexpectedly, Virtus Convertible 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 Convertible will offset losses from the drop in Virtus Convertible's long position.

The idea behind Abr Enhanced Short and Virtus Convertible 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.