Correlation Between Virtus Newfleet and Strategy Shares

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

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

Diversification Opportunities for Virtus Newfleet and Strategy Shares

-0.29

Correlation Coefficient

Virtus Newfleet  Strategy Shares

Very good diversification

The 3 months correlation between Virtus and Strategy is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Newfleet ABSMBS and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares and Virtus Newfleet 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 Newfleet ABSMBS are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of Virtus Newfleet i.e., Virtus Newfleet and Strategy Shares go up and down completely randomly.

Pair Corralation between Virtus Newfleet and Strategy Shares

Given the investment horizon of 90 days Virtus Newfleet ABSMBS is expected to generate 0.38 times more return on investment than Strategy Shares. However, Virtus Newfleet ABSMBS is 2.64 times less risky than Strategy Shares. It trades about 0.19 of its potential returns per unit of risk. Strategy Shares is currently generating about 0.01 per unit of risk. If you would invest  2,113  in Virtus Newfleet ABSMBS on October 4, 2024 and sell it today you would earn a total of  304.00  from holding Virtus Newfleet ABSMBS or generate 14.39% return on investment over 90 days.

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

Virtus Newfleet ABSMBS  vs.  Strategy Shares

Virtus Newfleet ABSMBS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Newfleet ABSMBS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Virtus Newfleet is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Strategy Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategy Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Strategy Shares is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Virtus Newfleet and Strategy Shares

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

The idea behind Virtus Newfleet ABSMBS and Strategy Shares 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.