Correlation Between Global X and Virtus WMC

Can any of the company-specific risk be diversified away by investing in both Global X and Virtus WMC 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 Global X and Virtus WMC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X NASDAQ and Virtus WMC International, you can compare the effects of market volatilities on Global X and Virtus WMC 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 Global X with a short position of Virtus WMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Virtus WMC.

Diversification Opportunities for Global X and Virtus WMC

-0.15

Correlation Coefficient

Global X  Virtus WMC

Good diversification

The 3 months correlation between Global and Virtus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Global X NASDAQ and Virtus WMC International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus WMC International and Global X 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 Global X NASDAQ are associated (or correlated) with Virtus WMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus WMC International has no effect on the direction of Global X i.e., Global X and Virtus WMC go up and down completely randomly.

Pair Corralation between Global X and Virtus WMC

Given the investment horizon of 90 days Global X NASDAQ is expected to under-perform the Virtus WMC. But the etf apears to be less risky and, when comparing its historical volatility, Global X NASDAQ is 1.27 times less risky than Virtus WMC. The etf trades about -0.03 of its potential returns per unit of risk. The Virtus WMC International is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,637  in Virtus WMC International on December 22, 2024 and sell it today you would earn a total of  340.00  from holding Virtus WMC International or generate 12.89% return on investment over 90 days.

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

Global X NASDAQ  vs.  Virtus WMC International

Global X NASDAQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X NASDAQ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Global X is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Virtus WMC International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus WMC International are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, Virtus WMC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Virtus WMC

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

The idea behind Global X NASDAQ and Virtus WMC International 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.