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 Capital, 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

0.93

Correlation Coefficient

Virtus Tactical  Virtus Kar

Almost no diversification

The 3 months correlation between Virtus and Virtus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Tactical Allocation and Virtus Kar Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Capital 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 Capital 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 is expected to generate 2.41 times less return on investment than Virtus Kar. But when comparing it to its historical volatility, Virtus Tactical Allocation is 1.76 times less risky than Virtus Kar. It trades about 0.12 of its potential returns per unit of risk. Virtus Kar Capital is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,176  in Virtus Kar Capital on September 17, 2024 and sell it today you would earn a total of  203.00  from holding Virtus Kar Capital or generate 9.33% return on investment over 90 days.

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

Virtus Tactical Allocation  vs.  Virtus Kar Capital

Virtus Tactical Allo

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Tactical Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. 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 Capital

Risk-Adjusted Performance

13 of 100

Good

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

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 Capital 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.