Correlation Between Virtus Kar and Rbc Smid

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

Diversification Opportunities for Virtus Kar and Rbc Smid

0.95

Correlation Coefficient

Virtus Kar  Rbc Smid

Almost no diversification

The 3 months correlation between VIRTUS and Rbc is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Rbc Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Smid Cap 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 Rbc Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Smid Cap has no effect on the direction of Virtus Kar i.e., Virtus Kar and Rbc Smid go up and down completely randomly.

Pair Corralation between Virtus Kar and Rbc Smid

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 0.89 times more return on investment than Rbc Smid. However, Virtus Kar Small Cap is 1.12 times less risky than Rbc Smid. It trades about -0.07 of its potential returns per unit of risk. Rbc Smid Cap is currently generating about -0.13 per unit of risk. If you would invest  3,761  in Virtus Kar Small Cap on December 28, 2024 and sell it today you would lose (159.00) from holding Virtus Kar Small Cap or give up 4.23% of portfolio value over 90 days.

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

Virtus Kar Small Cap  vs.  Rbc Smid Cap

Virtus Kar Small

Risk-Adjusted Performance

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 fundamental indicators, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rbc Smid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rbc Smid Cap 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 Rbc Smid

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

The idea behind Virtus Kar Small Cap and Rbc Smid Cap 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..