Correlation Between Ford and Virtus Multi

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

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

Diversification Opportunities for Ford and Virtus Multi

-0.39

Correlation Coefficient

Ford  Virtus Multi

Very good diversification

The 3 months correlation between Ford and Virtus is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Virtus Multi Sector Intermedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Sector and Ford 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 Ford Motor are associated (or correlated) with Virtus Multi. 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 Sector has no effect on the direction of Ford i.e., Ford and Virtus Multi go up and down completely randomly.

Pair Corralation between Ford and Virtus Multi

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Virtus Multi. In addition to that, Ford is 9.73 times more volatile than Virtus Multi Sector Intermediate. It trades about -0.05 of its total potential returns per unit of risk. Virtus Multi Sector Intermediate is currently generating about -0.02 per unit of volatility. If you would invest  920.00  in Virtus Multi Sector Intermediate on September 18, 2024 and sell it today you would lose (2.00) from holding Virtus Multi Sector Intermediate or give up 0.22% of portfolio value over 90 days.

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

Ford Motor  vs.  Virtus Multi Sector Intermedia

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Virtus Multi Sector

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ford and Virtus Multi

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

The idea behind Ford Motor and Virtus Multi Sector Intermediate 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 Commodity Directory module to find actively traded commodities issued by global exchanges.