Correlation Between Virtus Investment and Jenoptik

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

Diversification Opportunities for Virtus Investment and Jenoptik

-0.87

Correlation Coefficient

Virtus Investment  Jenoptik

Pay attention - limited upside

The 3 months correlation between Virtus and Jenoptik is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and Jenoptik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jenoptik AG 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 Jenoptik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jenoptik AG has no effect on the direction of Virtus Investment i.e., Virtus Investment and Jenoptik go up and down completely randomly.

Pair Corralation between Virtus Investment and Jenoptik

Assuming the 90 days horizon Virtus Investment Partners is expected to generate 0.91 times more return on investment than Jenoptik. However, Virtus Investment Partners is 1.09 times less risky than Jenoptik. It trades about 0.18 of its potential returns per unit of risk. Jenoptik AG is currently generating about -0.13 per unit of risk. If you would invest  18,298  in Virtus Investment Partners on September 18, 2024 and sell it today you would earn a total of  4,702  from holding Virtus Investment Partners or generate 25.7% return on investment over 90 days.

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

Virtus Investment Partners  vs.  Jenoptik AG

Virtus Investment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Jenoptik AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jenoptik AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Virtus Investment and Jenoptik

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

The idea behind Virtus Investment Partners and Jenoptik AG 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 Global Correlations module to find global opportunities by holding instruments from different markets.