Correlation Between Virtus Nfj and First American

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

By analyzing existing cross correlation between Virtus Nfj Large Cap and First American Funds, you can compare the effects of market volatilities on Virtus Nfj and First American 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 Nfj with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Nfj and First American.

Diversification Opportunities for Virtus Nfj and First American

0.51

Correlation Coefficient

Virtus Nfj  First American

Very weak diversification

The 3 months correlation between Virtus and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Nfj Large Cap and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds and Virtus Nfj 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 Nfj Large Cap are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of Virtus Nfj i.e., Virtus Nfj and First American go up and down completely randomly.

Pair Corralation between Virtus Nfj and First American

Assuming the 90 days horizon Virtus Nfj Large Cap is expected to generate 5.06 times more return on investment than First American. However, Virtus Nfj is 5.06 times more volatile than First American Funds. It trades about 0.04 of its potential returns per unit of risk. First American Funds is currently generating about 0.13 per unit of risk. If you would invest  2,858  in Virtus Nfj Large Cap on September 14, 2024 and sell it today you would earn a total of  40.00  from holding Virtus Nfj Large Cap or generate 1.4% return on investment over 90 days.

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

Virtus Nfj Large Cap  vs.  First American Funds

Virtus Nfj Large

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Nfj Large Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Virtus Nfj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First American Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First American Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, First American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Nfj and First American

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

The idea behind Virtus Nfj Large Cap and First American Funds 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.