Correlation Between Highland Floating and Virtus Allianzgi

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

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

Diversification Opportunities for Highland Floating and Virtus Allianzgi

0.55

Correlation Coefficient

Highland Floating  Virtus Allianzgi

Very weak diversification

The 3 months correlation between Highland and Virtus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Highland Floating Rate and Virtus Allianzgi Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Allianzgi Art and Highland Floating 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 Highland Floating Rate are associated (or correlated) with Virtus Allianzgi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Allianzgi Art has no effect on the direction of Highland Floating i.e., Highland Floating and Virtus Allianzgi go up and down completely randomly.

Pair Corralation between Highland Floating and Virtus Allianzgi

Given the investment horizon of 90 days Highland Floating Rate is expected to generate 0.73 times more return on investment than Virtus Allianzgi. However, Highland Floating Rate is 1.38 times less risky than Virtus Allianzgi. It trades about 0.01 of its potential returns per unit of risk. Virtus Allianzgi Artificial is currently generating about -0.01 per unit of risk. If you would invest  577.00  in Highland Floating Rate on November 29, 2024 and sell it today you would earn a total of  2.00  from holding Highland Floating Rate or generate 0.35% return on investment over 90 days.

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

Highland Floating Rate  vs.  Virtus Allianzgi Artificial

Highland Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highland Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Highland Floating is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Virtus Allianzgi Art

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Allianzgi Artificial has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy forward indicators, Virtus Allianzgi is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Highland Floating and Virtus Allianzgi

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

The idea behind Highland Floating Rate and Virtus Allianzgi Artificial 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.