Correlation Between Virtus Seix and The Fairholme

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

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

Diversification Opportunities for Virtus Seix and The Fairholme

-0.69

Correlation Coefficient

Virtus Seix  The Fairholme

Excellent diversification

The 3 months correlation between Virtus and The is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Seix Government and The Fairholme Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Fairholme and Virtus Seix 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 Seix Government are associated (or correlated) with The Fairholme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Fairholme has no effect on the direction of Virtus Seix i.e., Virtus Seix and The Fairholme go up and down completely randomly.

Pair Corralation between Virtus Seix and The Fairholme

Assuming the 90 days horizon Virtus Seix Government is not expected to generate positive returns. However, Virtus Seix Government is 24.44 times less risky than The Fairholme. It waists most of its returns potential to compensate for thr risk taken. The Fairholme is generating about -0.25 per unit of risk. If you would invest  989.00  in Virtus Seix Government on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Virtus Seix Government or generate 0.0% return on investment over 90 days.

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

Virtus Seix Government  vs.  The Fairholme Fund

Virtus Seix Government

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Seix Government are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Virtus Seix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Fairholme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Fairholme Fund 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Virtus Seix and The Fairholme

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

The idea behind Virtus Seix Government and The Fairholme Fund 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.