Correlation Between CBH and Virtus Dividend

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

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

Diversification Opportunities for CBH and Virtus Dividend

0.19

Correlation Coefficient

CBH  Virtus Dividend

Average diversification

The 3 months correlation between CBH and Virtus is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CBH and Virtus Dividend Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Dividend Interest and CBH 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 CBH are associated (or correlated) with Virtus Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Dividend Interest has no effect on the direction of CBH i.e., CBH and Virtus Dividend go up and down completely randomly.

Pair Corralation between CBH and Virtus Dividend

Considering the 90-day investment horizon CBH is expected to generate 1.71 times less return on investment than Virtus Dividend. But when comparing it to its historical volatility, CBH is 1.47 times less risky than Virtus Dividend. It trades about 0.06 of its potential returns per unit of risk. Virtus Dividend Interest is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  957.00  in Virtus Dividend Interest on September 26, 2024 and sell it today you would earn a total of  299.00  from holding Virtus Dividend Interest or generate 31.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.07%
Values	Daily Returns

CBH  vs.  Virtus Dividend Interest

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Virtus Dividend Interest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dividend Interest has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady technical and fundamental indicators, Virtus Dividend is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with CBH and Virtus Dividend

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

The idea behind CBH and Virtus Dividend Interest 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .