Correlation Between Virtus Global and Frontier Mfg

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

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

Diversification Opportunities for Virtus Global and Frontier Mfg

0.92

Correlation Coefficient

Virtus Global  Frontier Mfg

Almost no diversification

The 3 months correlation between Virtus and Frontier is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Global Infrastructure and Frontier Mfg E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg E and Virtus Global 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 Global Infrastructure are associated (or correlated) with Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg E has no effect on the direction of Virtus Global i.e., Virtus Global and Frontier Mfg go up and down completely randomly.

Pair Corralation between Virtus Global and Frontier Mfg

Assuming the 90 days horizon Virtus Global Infrastructure is expected to generate 0.72 times more return on investment than Frontier Mfg. However, Virtus Global Infrastructure is 1.39 times less risky than Frontier Mfg. It trades about 0.02 of its potential returns per unit of risk. Frontier Mfg E is currently generating about -0.02 per unit of risk. If you would invest  1,370  in Virtus Global Infrastructure on October 21, 2024 and sell it today you would earn a total of  71.00  from holding Virtus Global Infrastructure or generate 5.18% return on investment over 90 days.

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

Virtus Global Infrastructure  vs.  Frontier Mfg E

Virtus Global Infras

Risk-Adjusted Performance

0 of 100

Very Weak

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

Frontier Mfg E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Mfg E 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Virtus Global and Frontier Mfg

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

The idea behind Virtus Global Infrastructure and Frontier Mfg E 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.