Correlation Between Fm Investments and Virtus Kar

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

By analyzing existing cross correlation between Fm Investments Large and Virtus Kar Small Cap, you can compare the effects of market volatilities on Fm Investments and Virtus Kar 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 Fm Investments with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fm Investments and Virtus Kar.

Diversification Opportunities for Fm Investments and Virtus Kar

0.25

Correlation Coefficient

Fm Investments  Virtus Kar

Modest diversification

The 3 months correlation between IAFLX and Virtus is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small and Fm Investments 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 Fm Investments Large are associated (or correlated) with Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Fm Investments i.e., Fm Investments and Virtus Kar go up and down completely randomly.

Pair Corralation between Fm Investments and Virtus Kar

Assuming the 90 days horizon Fm Investments Large is expected to generate 0.53 times more return on investment than Virtus Kar. However, Fm Investments Large is 1.88 times less risky than Virtus Kar. It trades about 0.18 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about -0.05 per unit of risk. If you would invest  1,791  in Fm Investments Large on September 28, 2024 and sell it today you would earn a total of  210.00  from holding Fm Investments Large or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Fm Investments Large  vs.  Virtus Kar Small Cap

Fm Investments Large

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fm Investments Large are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Fm Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Virtus Kar Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fm Investments and Virtus Kar

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

The idea behind Fm Investments Large and Virtus Kar Small Cap 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.