Correlation Between HDAW and Virtus WMC

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

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

Diversification Opportunities for HDAW and Virtus WMC

0.0

Correlation Coefficient

HDAW  Virtus WMC

Pay attention - limited upside

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

Pair Corralation between HDAW and Virtus WMC

If you would invest  2,659  in Virtus WMC International on December 26, 2024 and sell it today you would earn a total of  338.00  from holding Virtus WMC International or generate 12.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

HDAW  vs.  Virtus WMC International

HDAW

Risk-Adjusted Performance

Very Weak

Over the last 90 days HDAW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HDAW is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Virtus WMC International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus WMC International are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Virtus WMC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HDAW and Virtus WMC

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

The idea behind HDAW and Virtus WMC International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.