Correlation Between EON SE and Virtus Investment

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

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

Diversification Opportunities for EON SE and Virtus Investment

-0.89

Correlation Coefficient

EON SE  Virtus Investment

Pay attention - limited upside

The 3 months correlation between EON and Virtus is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding EON SE and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment and EON SE 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 EON SE are associated (or correlated) with Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of EON SE i.e., EON SE and Virtus Investment go up and down completely randomly.

Pair Corralation between EON SE and Virtus Investment

Assuming the 90 days trading horizon EON SE is expected to under-perform the Virtus Investment. But the stock apears to be less risky and, when comparing its historical volatility, EON SE is 1.84 times less risky than Virtus Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Virtus Investment Partners is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  19,405  in Virtus Investment Partners on September 13, 2024 and sell it today you would earn a total of  3,995  from holding Virtus Investment Partners or generate 20.59% return on investment over 90 days.

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

EON SE  vs.  Virtus Investment Partners

EON SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EON SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Virtus Investment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EON SE and Virtus Investment

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

The idea behind EON SE and Virtus Investment Partners 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.