Correlation Between Avantis International and Virtus Convertible

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

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

Diversification Opportunities for Avantis International and Virtus Convertible

-0.42

Correlation Coefficient

Avantis International  Virtus Convertible

Very good diversification

The 3 months correlation between Avantis and Virtus is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Small and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Avantis 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 Avantis International Small 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 Avantis International i.e., Avantis International and Virtus Convertible go up and down completely randomly.

Pair Corralation between Avantis International and Virtus Convertible

Assuming the 90 days horizon Avantis International Small is expected to generate 1.12 times more return on investment than Virtus Convertible. However, Avantis International is 1.12 times more volatile than Virtus Convertible. It trades about 0.18 of its potential returns per unit of risk. Virtus Convertible is currently generating about -0.08 per unit of risk. If you would invest  1,215  in Avantis International Small on December 23, 2024 and sell it today you would earn a total of  120.00  from holding Avantis International Small or generate 9.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Avantis International Small  vs.  Virtus Convertible

Avantis International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis International Small are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Avantis International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Virtus Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Convertible has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Virtus Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avantis International and Virtus Convertible

The main advantage of trading using opposite Avantis International and Virtus Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International 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 Avantis International Small 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.