Correlation Between Virtus Investment and Carnegie Clean

Can any of the company-specific risk be diversified away by investing in both Virtus Investment and Carnegie Clean 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 Carnegie Clean 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 Carnegie Clean Energy, you can compare the effects of market volatilities on Virtus Investment and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Investment and Carnegie Clean.

Diversification Opportunities for Virtus Investment and Carnegie Clean

0.12

Correlation Coefficient

Virtus Investment  Carnegie Clean

Average diversification

The 3 months correlation between Virtus and Carnegie is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Virtus Investment i.e., Virtus Investment and Carnegie Clean go up and down completely randomly.

Pair Corralation between Virtus Investment and Carnegie Clean

Assuming the 90 days horizon Virtus Investment Partners is expected to under-perform the Carnegie Clean. But the stock apears to be less risky and, when comparing its historical volatility, Virtus Investment Partners is 2.26 times less risky than Carnegie Clean. The stock trades about -0.15 of its potential returns per unit of risk. The Carnegie Clean Energy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2.18  in Carnegie Clean Energy on December 21, 2024 and sell it today you would lose (0.26) from holding Carnegie Clean Energy or give up 11.93% of portfolio value over 90 days.

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

Virtus Investment Partners  vs.  Carnegie Clean Energy

Virtus Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Carnegie Clean Energy

Risk-Adjusted Performance

Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Carnegie Clean is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virtus Investment and Carnegie Clean

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

The idea behind Virtus Investment Partners and Carnegie Clean Energy 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .