Correlation Between Europacific Growth and Virtus Foreign

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

By analyzing existing cross correlation between Europacific Growth Fund and Virtus Foreign Opportunities, you can compare the effects of market volatilities on Europacific Growth and Virtus Foreign 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 Europacific Growth with a short position of Virtus Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Virtus Foreign.

Diversification Opportunities for Europacific Growth and Virtus Foreign

-0.66

Correlation Coefficient

Europacific Growth  Virtus Foreign

Excellent diversification

The 3 months correlation between Europacific and Virtus is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Virtus Foreign Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Foreign Oppor and Europacific Growth 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 Europacific Growth Fund are associated (or correlated) with Virtus Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Foreign Oppor has no effect on the direction of Europacific Growth i.e., Europacific Growth and Virtus Foreign go up and down completely randomly.

Pair Corralation between Europacific Growth and Virtus Foreign

Assuming the 90 days horizon Europacific Growth is expected to generate 2.6 times less return on investment than Virtus Foreign. In addition to that, Europacific Growth is 1.07 times more volatile than Virtus Foreign Opportunities. It trades about 0.03 of its total potential returns per unit of risk. Virtus Foreign Opportunities is currently generating about 0.07 per unit of volatility. If you would invest  2,303  in Virtus Foreign Opportunities on October 11, 2024 and sell it today you would earn a total of  387.00  from holding Virtus Foreign Opportunities or generate 16.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	58.99%
Values	Daily Returns

Europacific Growth Fund  vs.  Virtus Foreign Opportunities

Europacific Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Virtus Foreign Oppor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Europacific Growth and Virtus Foreign

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

The idea behind Europacific Growth Fund and Virtus Foreign Opportunities 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.