Correlation Between Real Assets and Virtus Convertible

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

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

Diversification Opportunities for Real Assets and Virtus Convertible

-0.35

Correlation Coefficient

Real Assets  Virtus Convertible

Very good diversification

The 3 months correlation between Real and Virtus is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Real Assets 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 Real Assets Portfolio are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Real Assets i.e., Real Assets and Virtus Convertible go up and down completely randomly.

Pair Corralation between Real Assets and Virtus Convertible

Assuming the 90 days horizon Real Assets Portfolio is expected to under-perform the Virtus Convertible. In addition to that, Real Assets is 1.18 times more volatile than Virtus Convertible. It trades about -0.04 of its total potential returns per unit of risk. Virtus Convertible is currently generating about 0.09 per unit of volatility. If you would invest  3,145  in Virtus Convertible on October 7, 2024 and sell it today you would earn a total of  436.00  from holding Virtus Convertible or generate 13.86% return on investment over 90 days.

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

Real Assets Portfolio  vs.  Virtus Convertible

Real Assets Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Assets Portfolio 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Virtus Convertible

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Real Assets and Virtus Convertible

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

The idea behind Real Assets Portfolio and Virtus Convertible 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.