Correlation Between Virtus Kar and Dreyfus Worldwide

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

0.42

Correlation Coefficient

Virtus Kar  Dreyfus Worldwide

Very weak diversification

The 3 months correlation between Virtus and Dreyfus is 0.42. 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 under-perform the Dreyfus Worldwide. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Kar Small Cap is 1.53 times less risky than Dreyfus Worldwide. The mutual fund trades about -0.33 of its potential returns per unit of risk. The Dreyfus Worldwide Growth is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  7,381  in Dreyfus Worldwide Growth on September 25, 2024 and sell it today you would lose (704.00) from holding Dreyfus Worldwide Growth or give up 9.54% of portfolio value over 90 days.

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

Virtus Kar Small Cap  vs.  Dreyfus Worldwide Growth

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.

Dreyfus Worldwide Growth

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.