Correlation Between Virtus International and Virtus Ceredex

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

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

Diversification Opportunities for Virtus International and Virtus Ceredex

0.41

Correlation Coefficient

Virtus International  Virtus Ceredex

Very weak diversification

The 3 months correlation between Virtus and Virtus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Virtus International Small Cap and Virtus Ceredex Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Ceredex Small and Virtus International 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 International Small Cap are associated (or correlated) with Virtus Ceredex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Ceredex Small has no effect on the direction of Virtus International i.e., Virtus International and Virtus Ceredex go up and down completely randomly.

Pair Corralation between Virtus International and Virtus Ceredex

Assuming the 90 days horizon Virtus International Small Cap is expected to generate 0.34 times more return on investment than Virtus Ceredex. However, Virtus International Small Cap is 2.91 times less risky than Virtus Ceredex. It trades about -0.16 of its potential returns per unit of risk. Virtus Ceredex Small Cap is currently generating about -0.08 per unit of risk. If you would invest  2,018  in Virtus International Small Cap on October 6, 2024 and sell it today you would lose (152.00) from holding Virtus International Small Cap or give up 7.53% of portfolio value over 90 days.

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

Virtus International Small Cap  vs.  Virtus Ceredex Small Cap

Virtus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus International Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Virtus Ceredex Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Ceredex Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Virtus International and Virtus Ceredex

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

The idea behind Virtus International Small Cap and Virtus Ceredex Small Cap 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.