Correlation Between Virtus Global and Columbia Dividend

Can any of the company-specific risk be diversified away by investing in both Virtus Global and Columbia Dividend 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 Columbia Dividend 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 Columbia Dividend Opportunity, you can compare the effects of market volatilities on Virtus Global and Columbia Dividend 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 Columbia Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Global and Columbia Dividend.

Diversification Opportunities for Virtus Global and Columbia Dividend

0.49

Correlation Coefficient

Virtus Global  Columbia Dividend

Very weak diversification

The 3 months correlation between Virtus and Columbia is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Global Infrastructure and Columbia Dividend Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Dividend 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 Columbia Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Dividend has no effect on the direction of Virtus Global i.e., Virtus Global and Columbia Dividend go up and down completely randomly.

Pair Corralation between Virtus Global and Columbia Dividend

Assuming the 90 days horizon Virtus Global is expected to generate 2.45 times less return on investment than Columbia Dividend. In addition to that, Virtus Global is 1.05 times more volatile than Columbia Dividend Opportunity. It trades about 0.06 of its total potential returns per unit of risk. Columbia Dividend Opportunity is currently generating about 0.17 per unit of volatility. If you would invest  3,893  in Columbia Dividend Opportunity on September 10, 2024 and sell it today you would earn a total of  232.00  from holding Columbia Dividend Opportunity or generate 5.96% return on investment over 90 days.

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

Virtus Global Infrastructure  vs.  Columbia Dividend Opportunity

Virtus Global Infras

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Global Infrastructure are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Columbia Dividend

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Dividend Opportunity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Global and Columbia Dividend

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

The idea behind Virtus Global Infrastructure and Columbia Dividend Opportunity 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.