Correlation Between Virtus Kar and Global Concentrated

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

Diversification Opportunities for Virtus Kar and Global Concentrated

0.46

Correlation Coefficient

Virtus Kar  Global Concentrated

Very weak diversification

The 3 months correlation between Virtus and Global is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por 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 Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Virtus Kar i.e., Virtus Kar and Global Concentrated go up and down completely randomly.

Pair Corralation between Virtus Kar and Global Concentrated

Assuming the 90 days horizon Virtus Kar Small Cap is expected to under-perform the Global Concentrated. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Kar Small Cap is 1.09 times less risky than Global Concentrated. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Global Centrated Portfolio is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,223  in Global Centrated Portfolio on December 29, 2024 and sell it today you would lose (53.00) from holding Global Centrated Portfolio or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Virtus Kar Small Cap  vs.  Global Centrated Portfolio

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.

Global Centrated Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Centrated Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Global Concentrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Kar and Global Concentrated

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

The idea behind Virtus Kar Small Cap and Global Centrated 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.