Correlation Between Midcap Fund and Virtus Emerging

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

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

Diversification Opportunities for Midcap Fund and Virtus Emerging

-0.05

Correlation Coefficient

Midcap Fund  Virtus Emerging

Good diversification

The 3 months correlation between Midcap and Virtus is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Class and Virtus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Emerging Markets and Midcap Fund 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 Midcap Fund Class are associated (or correlated) with Virtus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Emerging Markets has no effect on the direction of Midcap Fund i.e., Midcap Fund and Virtus Emerging go up and down completely randomly.

Pair Corralation between Midcap Fund and Virtus Emerging

Assuming the 90 days horizon Midcap Fund Class is expected to under-perform the Virtus Emerging. In addition to that, Midcap Fund is 1.32 times more volatile than Virtus Emerging Markets. It trades about -0.02 of its total potential returns per unit of risk. Virtus Emerging Markets is currently generating about 0.07 per unit of volatility. If you would invest  721.00  in Virtus Emerging Markets on December 26, 2024 and sell it today you would earn a total of  23.00  from holding Virtus Emerging Markets or generate 3.19% return on investment over 90 days.

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

Midcap Fund Class  vs.  Virtus Emerging Markets

Midcap Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Midcap Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Midcap Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Emerging Markets

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Emerging Markets are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Virtus Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Midcap Fund and Virtus Emerging

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

The idea behind Midcap Fund Class and Virtus Emerging Markets 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.