Correlation Between Delaware Emerging and Virtus Multi-strategy

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

By analyzing existing cross correlation between Delaware Emerging Markets and Virtus Multi Strategy Target, you can compare the effects of market volatilities on Delaware Emerging and Virtus Multi-strategy 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 Delaware Emerging with a short position of Virtus Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delaware Emerging and Virtus Multi-strategy.

Diversification Opportunities for Delaware Emerging and Virtus Multi-strategy

0.91

Correlation Coefficient

Delaware Emerging  Virtus Multi-strategy

Almost no diversification

The 3 months correlation between Delaware and Virtus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Emerging Markets and Virtus Multi Strategy Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Strategy and Delaware Emerging 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 Delaware Emerging Markets are associated (or correlated) with Virtus Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Strategy has no effect on the direction of Delaware Emerging i.e., Delaware Emerging and Virtus Multi-strategy go up and down completely randomly.

Pair Corralation between Delaware Emerging and Virtus Multi-strategy

Assuming the 90 days horizon Delaware Emerging Markets is expected to under-perform the Virtus Multi-strategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Delaware Emerging Markets is 1.24 times less risky than Virtus Multi-strategy. The mutual fund trades about -0.43 of its potential returns per unit of risk. The Virtus Multi Strategy Target is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest  1,818  in Virtus Multi Strategy Target on October 12, 2024 and sell it today you would lose (20.00) from holding Virtus Multi Strategy Target or give up 1.1% of portfolio value over 90 days.

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

Delaware Emerging Markets  vs.  Virtus Multi Strategy Target

Delaware Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Delaware Emerging and Virtus Multi-strategy

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

The idea behind Delaware Emerging Markets and Virtus Multi Strategy Target 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 .