Correlation Between Virtus Convertible and Virtus Kar

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

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

Diversification Opportunities for Virtus Convertible and Virtus Kar

0.65

Correlation Coefficient

Virtus Convertible  Virtus Kar

Poor diversification

The 3 months correlation between Virtus and Virtus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Virtus Kar Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Capital 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Capital has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Virtus Kar go up and down completely randomly.

Pair Corralation between Virtus Convertible and Virtus Kar

Assuming the 90 days horizon Virtus Convertible is expected to under-perform the Virtus Kar. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Convertible is 1.51 times less risky than Virtus Kar. The mutual fund trades about -0.35 of its potential returns per unit of risk. The Virtus Kar Capital is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  1,118  in Virtus Kar Capital on December 1, 2024 and sell it today you would lose (38.00) from holding Virtus Kar Capital or give up 3.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Virtus Convertible  vs.  Virtus Kar Capital

Virtus Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Convertible has generated negative risk-adjusted returns adding no value to fund investors. 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.

Virtus Kar Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Kar Capital 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Virtus Convertible and Virtus Kar

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

The idea behind Virtus Convertible and Virtus Kar Capital 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.