Correlation Between Virtus and FlexShares Core

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

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

Diversification Opportunities for Virtus and FlexShares Core

0.0

Correlation Coefficient

Virtus  FlexShares Core

Pay attention - limited upside

The 3 months correlation between Virtus and FlexShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Virtus and FlexShares Core Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Core Select and Virtus 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 are associated (or correlated) with FlexShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Core Select has no effect on the direction of Virtus i.e., Virtus and FlexShares Core go up and down completely randomly.

Pair Corralation between Virtus and FlexShares Core

If you would invest  2,164  in FlexShares Core Select on December 30, 2024 and sell it today you would earn a total of  53.00  from holding FlexShares Core Select or generate 2.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Virtus  vs.  FlexShares Core Select

Virtus

Risk-Adjusted Performance

Very Weak

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

FlexShares Core Select

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Core Select are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, FlexShares Core is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Virtus and FlexShares Core

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

The idea behind Virtus and FlexShares Core Select 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.