Correlation Between Virtus Kar and Internet Ultrasector

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

Diversification Opportunities for Virtus Kar and Internet Ultrasector

0.84

Correlation Coefficient

Virtus Kar  Internet Ultrasector

Very poor diversification

The 3 months correlation between Virtus and Internet is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Internet Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Ultrasector 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 Internet Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Ultrasector has no effect on the direction of Virtus Kar i.e., Virtus Kar and Internet Ultrasector go up and down completely randomly.

Pair Corralation between Virtus Kar and Internet Ultrasector

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 0.5 times more return on investment than Internet Ultrasector. However, Virtus Kar Small Cap is 2.01 times less risky than Internet Ultrasector. It trades about -0.14 of its potential returns per unit of risk. Internet Ultrasector Profund is currently generating about -0.1 per unit of risk. If you would invest  3,313  in Virtus Kar Small Cap on December 30, 2024 and sell it today you would lose (328.00) from holding Virtus Kar Small Cap or give up 9.9% of portfolio value over 90 days.

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

Virtus Kar Small Cap  vs.  Internet Ultrasector Profund

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

Internet Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Internet Ultrasector Profund 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Virtus Kar and Internet Ultrasector

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

The idea behind Virtus Kar Small Cap and Internet Ultrasector Profund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.