Correlation Between Virtus Global and Wilmington Large-cap

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

By analyzing existing cross correlation between Virtus Global Real and Wilmington Large Cap Strategy, you can compare the effects of market volatilities on Virtus Global and Wilmington Large-cap 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 Global with a short position of Wilmington Large-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Global and Wilmington Large-cap.

Diversification Opportunities for Virtus Global and Wilmington Large-cap

-0.46

Correlation Coefficient

Virtus Global  Wilmington Large-cap

Very good diversification

The 3 months correlation between Virtus and Wilmington is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Global Real and Wilmington Large Cap Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Large Cap and Virtus Global 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 Global Real are associated (or correlated) with Wilmington Large-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Large Cap has no effect on the direction of Virtus Global i.e., Virtus Global and Wilmington Large-cap go up and down completely randomly.

Pair Corralation between Virtus Global and Wilmington Large-cap

Assuming the 90 days horizon Virtus Global is expected to generate 7.05 times less return on investment than Wilmington Large-cap. In addition to that, Virtus Global is 1.0 times more volatile than Wilmington Large Cap Strategy. It trades about 0.03 of its total potential returns per unit of risk. Wilmington Large Cap Strategy is currently generating about 0.21 per unit of volatility. If you would invest  3,166  in Wilmington Large Cap Strategy on September 2, 2024 and sell it today you would earn a total of  323.00  from holding Wilmington Large Cap Strategy or generate 10.2% return on investment over 90 days.

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

Virtus Global Real  vs.  Wilmington Large Cap Strategy

Virtus Global Real

Risk-Adjusted Performance

2 of 100

Weak

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

Wilmington Large Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmington Large Cap Strategy are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Wilmington Large-cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virtus Global and Wilmington Large-cap

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

The idea behind Virtus Global Real and Wilmington Large Cap Strategy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.