Correlation Between James Balanced and Virtus Convertible

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

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

Diversification Opportunities for James Balanced and Virtus Convertible

-0.02

Correlation Coefficient

James Balanced  Virtus Convertible

Good diversification

The 3 months correlation between James and Virtus is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and James Balanced 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 James Balanced Golden are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of James Balanced i.e., James Balanced and Virtus Convertible go up and down completely randomly.

Pair Corralation between James Balanced and Virtus Convertible

Assuming the 90 days horizon James Balanced is expected to generate 1.4 times less return on investment than Virtus Convertible. But when comparing it to its historical volatility, James Balanced Golden is 1.25 times less risky than Virtus Convertible. It trades about 0.06 of its potential returns per unit of risk. Virtus Convertible is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,917  in Virtus Convertible on September 28, 2024 and sell it today you would earn a total of  675.00  from holding Virtus Convertible or generate 23.14% return on investment over 90 days.

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

James Balanced Golden  vs.  Virtus Convertible

James Balanced Golden

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Convertible

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with James Balanced and Virtus Convertible

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

The idea behind James Balanced Golden and Virtus Convertible 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.