Correlation Between Virtus Kar and International Opportunity

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

Diversification Opportunities for Virtus Kar and International Opportunity

0.53

Correlation Coefficient

Virtus Kar  International Opportunity

Very weak diversification

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

Pair Corralation between Virtus Kar and International Opportunity

Assuming the 90 days horizon Virtus Kar Mid Cap is expected to under-perform the International Opportunity. In addition to that, Virtus Kar is 1.16 times more volatile than International Opportunity Portfolio. It trades about 0.0 of its total potential returns per unit of risk. International Opportunity Portfolio is currently generating about 0.08 per unit of volatility. If you would invest  2,873  in International Opportunity Portfolio on September 19, 2024 and sell it today you would earn a total of  121.00  from holding International Opportunity Portfolio or generate 4.21% return on investment over 90 days.

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

Virtus Kar Mid Cap  vs.  International Opportunity Port

Virtus Kar Mid

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Virtus Kar Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Opportunity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Opportunity Portfolio are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, International Opportunity 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 International Opportunity

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

The idea behind Virtus Kar Mid Cap and International Opportunity Portfolio 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.