Correlation Between Virtus Kar and SAMMON

Can any of the company-specific risk be diversified away by investing in both Virtus Kar and SAMMON 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 SAMMON 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 SAMMON 475 08 APR 32, you can compare the effects of market volatilities on Virtus Kar and SAMMON 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 SAMMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and SAMMON.

Diversification Opportunities for Virtus Kar and SAMMON

0.75

Correlation Coefficient

Virtus Kar  SAMMON

Poor diversification

The 3 months correlation between Virtus and SAMMON is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Mid Cap and SAMMON 475 08 APR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMMON 475 08 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 SAMMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMMON 475 08 has no effect on the direction of Virtus Kar i.e., Virtus Kar and SAMMON go up and down completely randomly.

Pair Corralation between Virtus Kar and SAMMON

Assuming the 90 days horizon Virtus Kar Mid Cap is expected to generate 0.41 times more return on investment than SAMMON. However, Virtus Kar Mid Cap is 2.43 times less risky than SAMMON. It trades about -0.26 of its potential returns per unit of risk. SAMMON 475 08 APR 32 is currently generating about -0.71 per unit of risk. If you would invest  6,437  in Virtus Kar Mid Cap on September 28, 2024 and sell it today you would lose (385.00) from holding Virtus Kar Mid Cap or give up 5.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	35.0%
Values	Daily Returns

Virtus Kar Mid Cap  vs.  SAMMON 475 08 APR 32

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.

SAMMON 475 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMMON 475 08 APR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for SAMMON 475 08 APR 32 investors.

Pair Trading with Virtus Kar and SAMMON

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

The idea behind Virtus Kar Mid Cap and SAMMON 475 08 APR 32 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.