Correlation Between Nasdaq and Virtus Tactical

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

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

Diversification Opportunities for Nasdaq and Virtus Tactical

0.78

Correlation Coefficient

Nasdaq  Virtus Tactical

Poor diversification

The 3 months correlation between Nasdaq and Virtus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Virtus Tactical go up and down completely randomly.

Pair Corralation between Nasdaq and Virtus Tactical

Given the investment horizon of 90 days Nasdaq is expected to generate 2.25 times less return on investment than Virtus Tactical. In addition to that, Nasdaq is 1.89 times more volatile than Virtus Tactical Allocation. It trades about 0.07 of its total potential returns per unit of risk. Virtus Tactical Allocation is currently generating about 0.3 per unit of volatility. If you would invest  1,196  in Virtus Tactical Allocation on September 18, 2024 and sell it today you would earn a total of  33.00  from holding Virtus Tactical Allocation or generate 2.76% return on investment over 90 days.

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

Nasdaq Inc  vs.  Virtus Tactical Allocation

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Nasdaq and Virtus Tactical

The main advantage of trading using opposite Nasdaq and Virtus Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.