Correlation Between Virtus Emerging and Thornburg Strategic

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

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

Diversification Opportunities for Virtus Emerging and Thornburg Strategic

0.64

Correlation Coefficient

Virtus Emerging  Thornburg Strategic

Poor diversification

The 3 months correlation between Virtus and Thornburg is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Emerging Markets and Thornburg Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Strategic and Virtus Emerging 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 Virtus Emerging Markets are associated (or correlated) with Thornburg Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Strategic has no effect on the direction of Virtus Emerging i.e., Virtus Emerging and Thornburg Strategic go up and down completely randomly.

Pair Corralation between Virtus Emerging and Thornburg Strategic

Assuming the 90 days horizon Virtus Emerging Markets is expected to generate 4.37 times more return on investment than Thornburg Strategic. However, Virtus Emerging is 4.37 times more volatile than Thornburg Strategic Income. It trades about -0.01 of its potential returns per unit of risk. Thornburg Strategic Income is currently generating about -0.09 per unit of risk. If you would invest  759.00  in Virtus Emerging Markets on September 15, 2024 and sell it today you would lose (7.00) from holding Virtus Emerging Markets or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Virtus Emerging Markets  vs.  Thornburg Strategic Income

Virtus Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thornburg Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Virtus Emerging and Thornburg Strategic

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

The idea behind Virtus Emerging Markets and Thornburg Strategic Income 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.