Correlation Between Virtus Kar and Dreyfus Worldwide

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

Diversification Opportunities for Virtus Kar and Dreyfus Worldwide

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Virtus and Dreyfus is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Dreyfus Worldwide Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Worldwide Growth 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 Dreyfus Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Worldwide Growth has no effect on the direction of Virtus Kar i.e., Virtus Kar and Dreyfus Worldwide go up and down completely randomly.

Pair Corralation between Virtus Kar and Dreyfus Worldwide

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 1.09 times more return on investment than Dreyfus Worldwide. However, Virtus Kar is 1.09 times more volatile than Dreyfus Worldwide Growth. It trades about 0.06 of its potential returns per unit of risk. Dreyfus Worldwide Growth is currently generating about 0.03 per unit of risk. If you would invest  3,867  in Virtus Kar Small Cap on September 29, 2024 and sell it today you would earn a total of  1,381  from holding Virtus Kar Small Cap or generate 35.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Virtus Kar Small Cap  vs.  Dreyfus Worldwide Growth

 Performance 
       Timeline  
Virtus Kar Small 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Dreyfus Worldwide Growth 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dreyfus Worldwide Growth 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 fundamental 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.

Virtus Kar and Dreyfus Worldwide Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Virtus Kar and Dreyfus Worldwide

The main advantage of trading using opposite Virtus Kar and Dreyfus Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Kar position performs unexpectedly, Dreyfus Worldwide 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 Dreyfus Worldwide will offset losses from the drop in Dreyfus Worldwide's long position.
The idea behind Virtus Kar Small Cap and Dreyfus Worldwide 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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