Correlation Between Matson Money and Virtus Kar

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

By analyzing existing cross correlation between Matson Money Equity and Virtus Kar Mid Cap, you can compare the effects of market volatilities on Matson Money and Virtus Kar 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 Matson Money with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Virtus Kar.

Diversification Opportunities for Matson Money and Virtus Kar

0.94

Correlation Coefficient

Matson Money  Virtus Kar

Almost no diversification

The 3 months correlation between Matson and Virtus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Virtus Kar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Mid and Matson Money 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 Matson Money Equity are associated (or correlated) with Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Mid has no effect on the direction of Matson Money i.e., Matson Money and Virtus Kar go up and down completely randomly.

Pair Corralation between Matson Money and Virtus Kar

Assuming the 90 days horizon Matson Money Equity is expected to under-perform the Virtus Kar. But the mutual fund apears to be less risky and, when comparing its historical volatility, Matson Money Equity is 1.45 times less risky than Virtus Kar. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Virtus Kar Mid Cap is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,325  in Virtus Kar Mid Cap on September 19, 2024 and sell it today you would lose (56.00) from holding Virtus Kar Mid Cap or give up 0.89% of portfolio value over 90 days.

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

Matson Money Equity  vs.  Virtus Kar Mid Cap

Matson Money Equity

Risk-Adjusted Performance

0 of 100

Insignificant

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

Virtus Kar Mid

Risk-Adjusted Performance

0 of 100

Modest

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

Pair Trading with Matson Money and Virtus Kar

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

The idea behind Matson Money Equity and Virtus Kar Mid Cap 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..