Correlation Between Virtus Convertible and First Trust
Can any of the company-specific risk be diversified away by investing in both Virtus Convertible and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Convertible and First Trust Short, you can compare the effects of market volatilities on Virtus Convertible and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Convertible and First Trust.
Diversification Opportunities for Virtus Convertible and First Trust
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Virtus and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and First Trust Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Short 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Short has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and First Trust go up and down completely randomly.
Pair Corralation between Virtus Convertible and First Trust
Assuming the 90 days horizon Virtus Convertible is expected to under-perform the First Trust. In addition to that, Virtus Convertible is 4.33 times more volatile than First Trust Short. It trades about -0.04 of its total potential returns per unit of risk. First Trust Short is currently generating about 0.08 per unit of volatility. If you would invest 1,770 in First Trust Short on December 28, 2024 and sell it today you would earn a total of 16.00 from holding First Trust Short or generate 0.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Virtus Convertible vs. First Trust Short
Performance |
Timeline |
Virtus Convertible |
First Trust Short |
Virtus Convertible and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Virtus Convertible and First Trust
The main advantage of trading using opposite Virtus Convertible and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Convertible position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.Virtus Convertible vs. Virtus High Yield | Virtus Convertible vs. Artisan High Income | Virtus Convertible vs. Fidelity American High | Virtus Convertible vs. Barings High Yield |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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