Correlation Between Ocean Park and Virtus ETF

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

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

Diversification Opportunities for Ocean Park and Virtus ETF

0.35

Correlation Coefficient

Ocean Park  Virtus ETF

Weak diversification

The 3 months correlation between Ocean and Virtus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Park High and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust and Ocean Park 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 Ocean Park High are associated (or correlated) with Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Ocean Park i.e., Ocean Park and Virtus ETF go up and down completely randomly.

Pair Corralation between Ocean Park and Virtus ETF

Given the investment horizon of 90 days Ocean Park High is expected to under-perform the Virtus ETF. But the etf apears to be less risky and, when comparing its historical volatility, Ocean Park High is 1.47 times less risky than Virtus ETF. The etf trades about -0.05 of its potential returns per unit of risk. The Virtus ETF Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,616  in Virtus ETF Trust on December 28, 2024 and sell it today you would earn a total of  65.00  from holding Virtus ETF Trust or generate 2.48% return on investment over 90 days.

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

Ocean Park High  vs.  Virtus ETF Trust

Ocean Park High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocean Park High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Virtus ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Virtus ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ocean Park and Virtus ETF

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

The idea behind Ocean Park High and Virtus ETF Trust 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.