Correlation Between GENERAL and Virtus Investment

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

By analyzing existing cross correlation between GENERAL ELEC CAP and Virtus Investment Partners,, you can compare the effects of market volatilities on GENERAL and Virtus Investment 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 GENERAL with a short position of Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GENERAL and Virtus Investment.

Diversification Opportunities for GENERAL and Virtus Investment

0.44

Correlation Coefficient

GENERAL  Virtus Investment

Very weak diversification

The 3 months correlation between GENERAL and Virtus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP and Virtus Investment Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment and GENERAL 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 GENERAL ELEC CAP are associated (or correlated) with Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of GENERAL i.e., GENERAL and Virtus Investment go up and down completely randomly.

Pair Corralation between GENERAL and Virtus Investment

Assuming the 90 days trading horizon GENERAL is expected to generate 2.94 times less return on investment than Virtus Investment. In addition to that, GENERAL is 1.72 times more volatile than Virtus Investment Partners,. It trades about 0.01 of its total potential returns per unit of risk. Virtus Investment Partners, is currently generating about 0.04 per unit of volatility. If you would invest  20,584  in Virtus Investment Partners, on October 11, 2024 and sell it today you would earn a total of  873.00  from holding Virtus Investment Partners, or generate 4.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.07%
Values	Daily Returns

GENERAL ELEC CAP  vs.  Virtus Investment Partners,

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GENERAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Virtus Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Virtus Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GENERAL and Virtus Investment

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

The idea behind GENERAL ELEC CAP and Virtus Investment Partners, 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.