Correlation Between Virtus Convertible and Columbia Convertible

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

By analyzing existing cross correlation between Virtus Convertible and Columbia Convertible Securities, you can compare the effects of market volatilities on Virtus Convertible and Columbia Convertible 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 Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Convertible and Columbia Convertible.

Diversification Opportunities for Virtus Convertible and Columbia Convertible

0.53

Correlation Coefficient

Virtus Convertible  Columbia Convertible

Very weak diversification

The 3 months correlation between Virtus and Columbia is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Columbia Convertible Securitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible 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 Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Columbia Convertible go up and down completely randomly.

Pair Corralation between Virtus Convertible and Columbia Convertible

Assuming the 90 days horizon Virtus Convertible is expected to generate 0.89 times more return on investment than Columbia Convertible. However, Virtus Convertible is 1.12 times less risky than Columbia Convertible. It trades about 0.06 of its potential returns per unit of risk. Columbia Convertible Securities is currently generating about -0.38 per unit of risk. If you would invest  2,978  in Virtus Convertible on October 4, 2024 and sell it today you would earn a total of  554.00  from holding Virtus Convertible or generate 18.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	3.64%
Values	Daily Returns

Virtus Convertible  vs.  Columbia Convertible Securitie

Virtus Convertible

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Convertible

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Convertible Securities 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 fundamental 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 Convertible and Columbia Convertible

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

The idea behind Virtus Convertible and Columbia Convertible Securities 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.