Correlation Between Virtus Kar and Virtus Global

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

Diversification Opportunities for Virtus Kar and Virtus Global

-0.38

Correlation Coefficient

Virtus Kar  Virtus Global

Very good diversification

The 3 months correlation between Virtus and Virtus is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Virtus Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Global Real 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 Virtus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Global Real has no effect on the direction of Virtus Kar i.e., Virtus Kar and Virtus Global go up and down completely randomly.

Pair Corralation between Virtus Kar and Virtus Global

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 1.63 times more return on investment than Virtus Global. However, Virtus Kar is 1.63 times more volatile than Virtus Global Real. It trades about 0.2 of its potential returns per unit of risk. Virtus Global Real is currently generating about 0.04 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Virtus Kar Small Cap  vs.  Virtus Global Real

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.

Virtus Global Real

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Global Real are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Global 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 Virtus Global

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

The idea behind Virtus Kar Small Cap and Virtus Global Real 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.