Correlation Between Virtus Kar and Global Opportunity

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

Diversification Opportunities for Virtus Kar and Global Opportunity

0.89

Correlation Coefficient

Virtus Kar  Global Opportunity

Very poor diversification

The 3 months correlation between Virtus and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Global Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunity 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 Global Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunity has no effect on the direction of Virtus Kar i.e., Virtus Kar and Global Opportunity go up and down completely randomly.

Pair Corralation between Virtus Kar and Global Opportunity

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 1.37 times more return on investment than Global Opportunity. However, Virtus Kar is 1.37 times more volatile than Global Opportunity Portfolio. It trades about 0.2 of its potential returns per unit of risk. Global Opportunity Portfolio is currently generating about 0.26 per unit of risk. If you would invest  3,470  in Virtus Kar Small Cap on August 31, 2024 and sell it today you would earn a total of  542.00  from holding Virtus Kar Small Cap or generate 15.62% return on investment over 90 days.

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

Virtus Kar Small Cap  vs.  Global Opportunity Portfolio

Virtus Kar Small

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Virtus Kar showed solid returns over the last few months and may actually be approaching a breakup point.

Global Opportunity

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Opportunity Portfolio are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Global Opportunity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Kar and Global Opportunity

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

The idea behind Virtus Kar Small Cap and Global Opportunity Portfolio 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.