Correlation Between Virtus Tactical and Virtus Kar

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

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

Diversification Opportunities for Virtus Tactical and Virtus Kar

0.51

Correlation Coefficient

Virtus Tactical  Virtus Kar

Very weak diversification

The 3 months correlation between Virtus and Virtus is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Tactical Allocation and Virtus Kar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Mid and Virtus Tactical 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 Tactical Allocation 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 Mid has no effect on the direction of Virtus Tactical i.e., Virtus Tactical and Virtus Kar go up and down completely randomly.

Pair Corralation between Virtus Tactical and Virtus Kar

Assuming the 90 days horizon Virtus Tactical Allocation is expected to generate 0.53 times more return on investment than Virtus Kar. However, Virtus Tactical Allocation is 1.87 times less risky than Virtus Kar. It trades about -0.01 of its potential returns per unit of risk. Virtus Kar Mid Cap is currently generating about -0.11 per unit of risk. If you would invest  1,070  in Virtus Tactical Allocation on December 26, 2024 and sell it today you would lose (4.00) from holding Virtus Tactical Allocation or give up 0.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Virtus Tactical Allocation  vs.  Virtus Kar Mid Cap

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 fairly strong basic indicators, Virtus Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Kar Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Kar Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals 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 Virtus Tactical and Virtus Kar

The main advantage of trading using opposite Virtus Tactical and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Tactical 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 Virtus Tactical Allocation and Virtus Kar Mid 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.