Correlation Between Virtus Bond and Goldman Sachs

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

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

Diversification Opportunities for Virtus Bond and Goldman Sachs

0.62

Correlation Coefficient

Virtus Bond  Goldman Sachs

Poor diversification

The 3 months correlation between Virtus and Goldman is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Bond Fund and Goldman Sachs Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Real and Virtus Bond 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 Bond Fund are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Real has no effect on the direction of Virtus Bond i.e., Virtus Bond and Goldman Sachs go up and down completely randomly.

Pair Corralation between Virtus Bond and Goldman Sachs

Assuming the 90 days horizon Virtus Bond Fund is expected to generate 0.22 times more return on investment than Goldman Sachs. However, Virtus Bond Fund is 4.55 times less risky than Goldman Sachs. It trades about 0.04 of its potential returns per unit of risk. Goldman Sachs Real is currently generating about -0.07 per unit of risk. If you would invest  1,023  in Virtus Bond Fund on December 2, 2024 and sell it today you would earn a total of  7.00  from holding Virtus Bond Fund or generate 0.68% return on investment over 90 days.

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

Virtus Bond Fund  vs.  Goldman Sachs Real

Virtus Bond Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Bond Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Goldman Sachs 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 Bond and Goldman Sachs

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

The idea behind Virtus Bond Fund and Goldman Sachs 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.