Correlation Between Virtus Kar and International Stock

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

By analyzing existing cross correlation between Virtus Kar Small Cap and International Stock Fund, you can compare the effects of market volatilities on Virtus Kar and International Stock 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 Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and International Stock.

Diversification Opportunities for Virtus Kar and International Stock

-0.23

Correlation Coefficient

Virtus Kar  International Stock

Very good diversification

The 3 months correlation between Virtus and International is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock 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 Small Cap are associated (or correlated) with International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of Virtus Kar i.e., Virtus Kar and International Stock go up and down completely randomly.

Pair Corralation between Virtus Kar and International Stock

Assuming the 90 days horizon Virtus Kar Small Cap is expected to under-perform the International Stock. In addition to that, Virtus Kar is 1.5 times more volatile than International Stock Fund. It trades about -0.33 of its total potential returns per unit of risk. International Stock Fund is currently generating about -0.19 per unit of volatility. If you would invest  2,388  in International Stock Fund on September 26, 2024 and sell it today you would lose (109.00) from holding International Stock Fund or give up 4.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Virtus Kar Small Cap  vs.  International Stock Fund

Virtus Kar Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly 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 the fund investors.

Pair Trading with Virtus Kar and International Stock

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

The idea behind Virtus Kar Small Cap and International Stock Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.