Correlation Between Microsoft and Virtus Tactical

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

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

Diversification Opportunities for Microsoft and Virtus Tactical

0.49

Correlation Coefficient

Microsoft  Virtus Tactical

Very weak diversification

The 3 months correlation between Microsoft and Virtus is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Virtus Tactical Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Tactical Allo and Microsoft 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 Microsoft are associated (or correlated) with Virtus Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Tactical Allo has no effect on the direction of Microsoft i.e., Microsoft and Virtus Tactical go up and down completely randomly.

Pair Corralation between Microsoft and Virtus Tactical

Given the investment horizon of 90 days Microsoft is expected to generate 1.29 times more return on investment than Virtus Tactical. However, Microsoft is 1.29 times more volatile than Virtus Tactical Allocation. It trades about 0.01 of its potential returns per unit of risk. Virtus Tactical Allocation is currently generating about -0.05 per unit of risk. If you would invest  40,010  in Microsoft on December 5, 2024 and sell it today you would earn a total of  92.00  from holding Microsoft or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.37%
Values	Daily Returns

Microsoft  vs.  Virtus Tactical Allocation

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Virtus Tactical Allo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Tactical Allocation 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.

Pair Trading with Microsoft and Virtus Tactical

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

The idea behind Microsoft and Virtus Tactical Allocation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..