Correlation Between Swan Defined and Virtus High

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

By analyzing existing cross correlation between Swan Defined Risk and Virtus High Yield, you can compare the effects of market volatilities on Swan Defined and Virtus High 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 Swan Defined with a short position of Virtus High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Defined and Virtus High.

Diversification Opportunities for Swan Defined and Virtus High

-0.25

Correlation Coefficient

Swan Defined  Virtus High

Very good diversification

The 3 months correlation between Swan and Virtus is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk and Virtus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus High Yield and Swan Defined 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 Swan Defined Risk are associated (or correlated) with Virtus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus High Yield has no effect on the direction of Swan Defined i.e., Swan Defined and Virtus High go up and down completely randomly.

Pair Corralation between Swan Defined and Virtus High

Assuming the 90 days horizon Swan Defined Risk is expected to under-perform the Virtus High. In addition to that, Swan Defined is 20.47 times more volatile than Virtus High Yield. It trades about -0.14 of its total potential returns per unit of risk. Virtus High Yield is currently generating about 0.1 per unit of volatility. If you would invest  379.00  in Virtus High Yield on December 20, 2024 and sell it today you would earn a total of  5.00  from holding Virtus High Yield or generate 1.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.44%
Values	Daily Returns

Swan Defined Risk  vs.  Virtus High Yield

Swan Defined Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swan Defined Risk has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Virtus High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus High Yield are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swan Defined and Virtus High

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

The idea behind Swan Defined Risk and Virtus High Yield 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.