Correlation Between Virtus Investment and GRUPO ECOENER

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

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

Diversification Opportunities for Virtus Investment and GRUPO ECOENER

0.64

Correlation Coefficient

Virtus Investment  GRUPO ECOENER

Poor diversification

The 3 months correlation between Virtus and GRUPO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and GRUPO ECOENER EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO ECOENER EO and Virtus Investment 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 Investment Partners are associated (or correlated) with GRUPO ECOENER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO ECOENER EO has no effect on the direction of Virtus Investment i.e., Virtus Investment and GRUPO ECOENER go up and down completely randomly.

Pair Corralation between Virtus Investment and GRUPO ECOENER

Assuming the 90 days horizon Virtus Investment Partners is expected to under-perform the GRUPO ECOENER. In addition to that, Virtus Investment is 1.41 times more volatile than GRUPO ECOENER EO. It trades about -0.33 of its total potential returns per unit of risk. GRUPO ECOENER EO is currently generating about 0.32 per unit of volatility. If you would invest  418.00  in GRUPO ECOENER EO on October 5, 2024 and sell it today you would earn a total of  28.00  from holding GRUPO ECOENER EO or generate 6.7% return on investment over 90 days.

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

Virtus Investment Partners  vs.  GRUPO ECOENER EO

Virtus Investment

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Virtus Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

GRUPO ECOENER EO

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days GRUPO ECOENER EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, GRUPO ECOENER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Virtus Investment and GRUPO ECOENER

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

The idea behind Virtus Investment Partners and GRUPO ECOENER EO 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.