Correlation Between Aquagold International and Virtus International

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

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

Diversification Opportunities for Aquagold International and Virtus International

0.62

Correlation Coefficient

Aquagold International  Virtus International

Poor diversification

The 3 months correlation between Aquagold and Virtus is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Virtus International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus International and Aquagold International 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 Aquagold International are associated (or correlated) with Virtus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus International has no effect on the direction of Aquagold International i.e., Aquagold International and Virtus International go up and down completely randomly.

Pair Corralation between Aquagold International and Virtus International

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Virtus International. In addition to that, Aquagold International is 17.5 times more volatile than Virtus International Small Cap. It trades about -0.13 of its total potential returns per unit of risk. Virtus International Small Cap is currently generating about -0.21 per unit of volatility. If you would invest  1,994  in Virtus International Small Cap on October 15, 2024 and sell it today you would lose (167.00) from holding Virtus International Small Cap or give up 8.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Aquagold International  vs.  Virtus International Small Cap

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Virtus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus International Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aquagold International and Virtus International

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

The idea behind Aquagold International and Virtus International Small Cap 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 Transaction History module to view history of all your transactions and understand their impact on performance.