Correlation Between Internet Ultrasector and Virtus Kar

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

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

Diversification Opportunities for Internet Ultrasector and Virtus Kar

0.84

Correlation Coefficient

Internet Ultrasector  Virtus Kar

Very poor diversification

The 3 months correlation between Internet and Virtus is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Internet Ultrasector Profund 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 Internet Ultrasector 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 Internet Ultrasector Profund 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 Internet Ultrasector i.e., Internet Ultrasector and Virtus Kar go up and down completely randomly.

Pair Corralation between Internet Ultrasector and Virtus Kar

Assuming the 90 days horizon Internet Ultrasector Profund is expected to under-perform the Virtus Kar. In addition to that, Internet Ultrasector is 2.01 times more volatile than Virtus Kar Small Cap. It trades about -0.1 of its total potential returns per unit of risk. Virtus Kar Small Cap is currently generating about -0.14 per unit of volatility. If you would invest  3,313  in Virtus Kar Small Cap on December 30, 2024 and sell it today you would lose (328.00) from holding Virtus Kar Small Cap or give up 9.9% of portfolio value over 90 days.

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

Internet Ultrasector Profund  vs.  Virtus Kar Small Cap

Internet Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Internet Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Virtus Kar Small

Risk-Adjusted Performance

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 latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Internet Ultrasector and Virtus Kar

The main advantage of trading using opposite Internet Ultrasector and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Internet Ultrasector 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 Internet Ultrasector Profund 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..