Correlation Between Virtus Real and Blackrock

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

By analyzing existing cross correlation between Virtus Real Estate and Blackrock Hi Yld, you can compare the effects of market volatilities on Virtus Real and Blackrock 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 Real with a short position of Blackrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Real and Blackrock.

Diversification Opportunities for Virtus Real and Blackrock

0.53

Correlation Coefficient

Virtus Real  Blackrock

Very weak diversification

The 3 months correlation between Virtus and Blackrock is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Real Estate and Blackrock Hi Yld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Hi Yld and Virtus Real 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 Real Estate are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Hi Yld has no effect on the direction of Virtus Real i.e., Virtus Real and Blackrock go up and down completely randomly.

Pair Corralation between Virtus Real and Blackrock

Assuming the 90 days horizon Virtus Real Estate is expected to generate 4.97 times more return on investment than Blackrock. However, Virtus Real is 4.97 times more volatile than Blackrock Hi Yld. It trades about 0.12 of its potential returns per unit of risk. Blackrock Hi Yld is currently generating about 0.15 per unit of risk. If you would invest  2,066  in Virtus Real Estate on September 2, 2024 and sell it today you would earn a total of  126.00  from holding Virtus Real Estate or generate 6.1% return on investment over 90 days.

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

Virtus Real Estate  vs.  Blackrock Hi Yld

Virtus Real Estate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Real Estate 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 Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Hi Yld

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Hi Yld are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock 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 Real and Blackrock

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

The idea behind Virtus Real Estate and Blackrock Hi Yld 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.