Correlation Between STF Tactical and Virtus WMC

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

By analyzing existing cross correlation between STF Tactical Growth and Virtus WMC International, you can compare the effects of market volatilities on STF Tactical and Virtus WMC 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 STF Tactical with a short position of Virtus WMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of STF Tactical and Virtus WMC.

Diversification Opportunities for STF Tactical and Virtus WMC

-0.54

Correlation Coefficient

STF Tactical  Virtus WMC

Excellent diversification

The 3 months correlation between STF and Virtus is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding STF Tactical Growth and Virtus WMC International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus WMC International and STF Tactical 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 STF Tactical Growth are associated (or correlated) with Virtus WMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus WMC International has no effect on the direction of STF Tactical i.e., STF Tactical and Virtus WMC go up and down completely randomly.

Pair Corralation between STF Tactical and Virtus WMC

Considering the 90-day investment horizon STF Tactical Growth is expected to generate 1.66 times more return on investment than Virtus WMC. However, STF Tactical is 1.66 times more volatile than Virtus WMC International. It trades about 0.08 of its potential returns per unit of risk. Virtus WMC International is currently generating about -0.08 per unit of risk. If you would invest  3,243  in STF Tactical Growth on October 20, 2024 and sell it today you would earn a total of  173.00  from holding STF Tactical Growth or generate 5.33% return on investment over 90 days.

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

STF Tactical Growth  vs.  Virtus WMC International

STF Tactical Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in STF Tactical Growth are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STF Tactical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Virtus WMC International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus WMC International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Virtus WMC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with STF Tactical and Virtus WMC

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

The idea behind STF Tactical Growth and Virtus WMC International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.