Correlation Between Virtus Kar and Multi Strategy

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

By analyzing existing cross correlation between Virtus Kar Mid Cap and The Multi Strategy Growth, you can compare the effects of market volatilities on Virtus Kar and Multi Strategy 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 Kar with a short position of Multi Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Multi Strategy.

Diversification Opportunities for Virtus Kar and Multi Strategy

0.92

Correlation Coefficient

Virtus Kar  Multi Strategy

Almost no diversification

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

Pair Corralation between Virtus Kar and Multi Strategy

Assuming the 90 days horizon Virtus Kar Mid Cap is expected to under-perform the Multi Strategy. In addition to that, Virtus Kar is 1.95 times more volatile than The Multi Strategy Growth. It trades about -0.29 of its total potential returns per unit of risk. The Multi Strategy Growth is currently generating about -0.42 per unit of volatility. If you would invest  1,216  in The Multi Strategy Growth on September 26, 2024 and sell it today you would lose (62.00) from holding The Multi Strategy Growth or give up 5.1% of portfolio value over 90 days.

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

Virtus Kar Mid Cap  vs.  The Multi Strategy Growth

Virtus Kar Mid

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Mid Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Multi Strategy Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Multi Strategy 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 Kar and Multi Strategy

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

The idea behind Virtus Kar Mid Cap and The Multi Strategy 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.