Correlation Between VCLO and Virtus ETF

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

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

Diversification Opportunities for VCLO and Virtus ETF

-0.8

Correlation Coefficient

VCLO  Virtus ETF

Pay attention - limited upside

The 3 months correlation between VCLO and Virtus is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding VCLO and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust and VCLO 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 VCLO are associated (or correlated) with Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of VCLO i.e., VCLO and Virtus ETF go up and down completely randomly.

Pair Corralation between VCLO and Virtus ETF

If you would invest  3,610  in Virtus ETF Trust on September 17, 2024 and sell it today you would earn a total of  369.00  from holding Virtus ETF Trust or generate 10.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	3.08%
Values	Daily Returns

VCLO  vs.  Virtus ETF Trust

VCLO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VCLO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, VCLO is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Virtus ETF Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Virtus ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VCLO and Virtus ETF

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

The idea behind VCLO and Virtus ETF Trust 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.