Correlation Between Virtus Convertible and Templeton Emerging

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

By analyzing existing cross correlation between Virtus Convertible and Templeton Emerging Markets, you can compare the effects of market volatilities on Virtus Convertible and Templeton Emerging 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 Convertible with a short position of Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Convertible and Templeton Emerging.

Diversification Opportunities for Virtus Convertible and Templeton Emerging

-0.64

Correlation Coefficient

Virtus Convertible  Templeton Emerging

Excellent diversification

The 3 months correlation between Virtus and Templeton is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging and Virtus Convertible 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 Convertible are associated (or correlated) with Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Templeton Emerging go up and down completely randomly.

Pair Corralation between Virtus Convertible and Templeton Emerging

Assuming the 90 days horizon Virtus Convertible is expected to generate 0.53 times more return on investment than Templeton Emerging. However, Virtus Convertible is 1.89 times less risky than Templeton Emerging. It trades about 0.09 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest  2,867  in Virtus Convertible on September 14, 2024 and sell it today you would earn a total of  833.00  from holding Virtus Convertible or generate 29.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Virtus Convertible  vs.  Templeton Emerging Markets

Virtus Convertible

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Virtus Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Templeton Emerging

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable primary indicators, Templeton Emerging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virtus Convertible and Templeton Emerging

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

The idea behind Virtus Convertible and Templeton Emerging Markets 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.