Correlation Between Virtus Real and Wasatch Ultra

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

Diversification Opportunities for Virtus Real and Wasatch Ultra

0.37

Correlation Coefficient

Virtus Real  Wasatch Ultra

Weak diversification

The 3 months correlation between Virtus and Wasatch is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Real Estate and Wasatch Ultra Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Ultra Growth 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 Wasatch Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Ultra Growth has no effect on the direction of Virtus Real i.e., Virtus Real and Wasatch Ultra go up and down completely randomly.

Pair Corralation between Virtus Real and Wasatch Ultra

Assuming the 90 days horizon Virtus Real Estate is expected to under-perform the Wasatch Ultra. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Real Estate is 1.36 times less risky than Wasatch Ultra. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Wasatch Ultra Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,317  in Wasatch Ultra Growth on September 12, 2024 and sell it today you would earn a total of  349.00  from holding Wasatch Ultra Growth or generate 10.52% return on investment over 90 days.

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

Virtus Real Estate  vs.  Wasatch Ultra Growth

Virtus Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Real Estate has generated negative risk-adjusted returns adding no value to fund investors. 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.

Wasatch Ultra Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Ultra Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Wasatch Ultra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virtus Real and Wasatch Ultra

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

The idea behind Virtus Real Estate and Wasatch Ultra Growth 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.