Correlation Between Virtus Bond and Virtus Global

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

Diversification Opportunities for Virtus Bond and Virtus Global

0.86

Correlation Coefficient

Virtus Bond  Virtus Global

Very poor diversification

The 3 months correlation between Virtus and Virtus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Bond Fund 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 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 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 Bond i.e., Virtus Bond and Virtus Global go up and down completely randomly.

Pair Corralation between Virtus Bond and Virtus Global

Assuming the 90 days horizon Virtus Bond Fund is expected to under-perform the Virtus Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Bond Fund is 2.77 times less risky than Virtus Global. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Virtus Global Real is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,680  in Virtus Global Real on August 31, 2024 and sell it today you would earn a total of  53.00  from holding Virtus Global Real or generate 1.44% return on investment over 90 days.

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

Virtus Bond Fund  vs.  Virtus Global Real

Virtus Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. 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 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 Bond and Virtus Global

The main advantage of trading using opposite Virtus Bond and Virtus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Bond 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 Bond Fund 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.