Correlation Between Virtus Bond and Virtus Senior

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

Diversification Opportunities for Virtus Bond and Virtus Senior

0.32

Correlation Coefficient

Virtus Bond  Virtus Senior

Weak diversification

The 3 months correlation between Virtus and Virtus is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Bond Fund and Virtus Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Senior Floating 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 Virtus Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Senior Floating has no effect on the direction of Virtus Bond i.e., Virtus Bond and Virtus Senior go up and down completely randomly.

Pair Corralation between Virtus Bond and Virtus Senior

Assuming the 90 days horizon Virtus Bond Fund is expected to generate 1.84 times more return on investment than Virtus Senior. However, Virtus Bond is 1.84 times more volatile than Virtus Senior Floating. It trades about 0.16 of its potential returns per unit of risk. Virtus Senior Floating is currently generating about 0.03 per unit of risk. If you would invest  999.00  in Virtus Bond Fund on December 22, 2024 and sell it today you would earn a total of  25.00  from holding Virtus Bond Fund or generate 2.5% return on investment over 90 days.

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

Virtus Bond Fund  vs.  Virtus Senior Floating

Virtus Bond Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Bond Fund are ranked lower than 12 (%) 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.

Virtus Senior Floating

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Senior Floating 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 Senior 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 Virtus Senior

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

The idea behind Virtus Bond Fund and Virtus Senior Floating 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.