Correlation Between Virtus Investment and Mineral Resources

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

Diversification Opportunities for Virtus Investment and Mineral Resources

-0.72

Correlation Coefficient

Virtus Investment  Mineral Resources

Pay attention - limited upside

The 3 months correlation between Virtus and Mineral is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources 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 Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of Virtus Investment i.e., Virtus Investment and Mineral Resources go up and down completely randomly.

Pair Corralation between Virtus Investment and Mineral Resources

Assuming the 90 days horizon Virtus Investment Partners is expected to under-perform the Mineral Resources. But the stock apears to be less risky and, when comparing its historical volatility, Virtus Investment Partners is 1.22 times less risky than Mineral Resources. The stock trades about -0.41 of its potential returns per unit of risk. The Mineral Resources Limited is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  2,192  in Mineral Resources Limited on October 12, 2024 and sell it today you would lose (110.00) from holding Mineral Resources Limited or give up 5.02% of portfolio value over 90 days.

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

Virtus Investment Partners  vs.  Mineral Resources Limited

Virtus Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mineral Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mineral Resources Limited 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Virtus Investment and Mineral Resources

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

The idea behind Virtus Investment Partners and Mineral Resources Limited 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.