Correlation Between Health Care and Virtus Bond

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

By analyzing existing cross correlation between Health Care Ultrasector and Virtus Bond Fund, you can compare the effects of market volatilities on Health Care and Virtus Bond 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 Health Care with a short position of Virtus Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Virtus Bond.

Diversification Opportunities for Health Care and Virtus Bond

0.0

Correlation Coefficient

Health Care  Virtus Bond

Pay attention - limited upside

The 3 months correlation between Health and Virtus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond Fund and Health Care 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 Health Care Ultrasector are associated (or correlated) with Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Health Care i.e., Health Care and Virtus Bond go up and down completely randomly.

Pair Corralation between Health Care and Virtus Bond

If you would invest  0.00  in Virtus Bond Fund on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Virtus Bond Fund or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Health Care Ultrasector  vs.  Virtus Bond Fund

Health Care Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health Care Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Virtus Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Health Care and Virtus Bond

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

The idea behind Health Care Ultrasector and Virtus Bond Fund 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 Transaction History module to view history of all your transactions and understand their impact on performance.