Correlation Between Global Bond and Virtus Multi-sector
Can any of the company-specific risk be diversified away by investing in both Global Bond and Virtus Multi-sector 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 Global Bond and Virtus Multi-sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Bond Fund and Virtus Multi Sector Short, you can compare the effects of market volatilities on Global Bond and Virtus Multi-sector 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 Global Bond with a short position of Virtus Multi-sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Virtus Multi-sector.
Diversification Opportunities for Global Bond and Virtus Multi-sector
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Virtus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Virtus Multi Sector Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Sector and Global Bond 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 Global Bond Fund are associated (or correlated) with Virtus Multi-sector. 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 Global Bond i.e., Global Bond and Virtus Multi-sector go up and down completely randomly.
Pair Corralation between Global Bond and Virtus Multi-sector
Assuming the 90 days horizon Global Bond Fund is expected to generate 1.64 times more return on investment than Virtus Multi-sector. However, Global Bond is 1.64 times more volatile than Virtus Multi Sector Short. It trades about 0.22 of its potential returns per unit of risk. Virtus Multi Sector Short is currently generating about 0.22 per unit of risk. If you would invest 842.00 in Global Bond Fund on December 5, 2024 and sell it today you would earn a total of 19.00 from holding Global Bond Fund or generate 2.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global Bond Fund vs. Virtus Multi Sector Short
Performance |
Timeline |
Global Bond Fund |
Virtus Multi Sector |
Global Bond and Virtus Multi-sector Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Bond and Virtus Multi-sector
The main advantage of trading using opposite Global Bond and Virtus Multi-sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Virtus Multi-sector 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-sector will offset losses from the drop in Virtus Multi-sector's long position.Global Bond vs. Financial Industries Fund | Global Bond vs. Fidelity Advisor Financial | Global Bond vs. Transamerica Financial Life | Global Bond vs. Davis Financial Fund |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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