Correlation Between Federated Short and Virtus Multi-strategy
Can any of the company-specific risk be diversified away by investing in both Federated Short 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 Federated Short 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 Federated Short Term Income and Virtus Multi Strategy Target, you can compare the effects of market volatilities on Federated Short 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 Federated Short with a short position of Virtus Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short and Virtus Multi-strategy.
Diversification Opportunities for Federated Short and Virtus Multi-strategy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Virtus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income 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 Federated Short 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 Federated Short Term Income 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 Federated Short i.e., Federated Short and Virtus Multi-strategy go up and down completely randomly.
Pair Corralation between Federated Short and Virtus Multi-strategy
Assuming the 90 days horizon Federated Short Term Income is expected to generate 0.67 times more return on investment than Virtus Multi-strategy. However, Federated Short Term Income is 1.48 times less risky than Virtus Multi-strategy. It trades about 0.15 of its potential returns per unit of risk. Virtus Multi Strategy Target is currently generating about 0.08 per unit of risk. If you would invest 843.00 in Federated Short Term Income on December 1, 2024 and sell it today you would earn a total of 10.00 from holding Federated Short Term Income or generate 1.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Short Term Income vs. Virtus Multi Strategy Target
Performance |
Timeline |
Federated Short Term |
Virtus Multi Strategy |
Federated Short and Virtus Multi-strategy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Short and Virtus Multi-strategy
The main advantage of trading using opposite Federated Short and Virtus Multi-strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short 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.Federated Short vs. Angel Oak Multi Strategy | Federated Short vs. Doubleline Emerging Markets | Federated Short vs. Shelton Emerging Markets | Federated Short vs. Ashmore Emerging Markets |
Virtus Multi-strategy vs. Mesirow Financial High | Virtus Multi-strategy vs. Msift High Yield | Virtus Multi-strategy vs. Alpine High Yield | Virtus Multi-strategy vs. Goldman Sachs High |
Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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