Correlation Between Virtus Investment and S A P

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

Diversification Opportunities for Virtus Investment and S A P

-0.18

Correlation Coefficient

Virtus Investment  S A P

Good diversification

The 3 months correlation between Virtus and SAP is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Virtus Investment i.e., Virtus Investment and S A P go up and down completely randomly.

Pair Corralation between Virtus Investment and S A P

Assuming the 90 days horizon Virtus Investment Partners is expected to under-perform the S A P. In addition to that, Virtus Investment is 1.5 times more volatile than SAP SE. It trades about -0.13 of its total potential returns per unit of risk. SAP SE is currently generating about 0.45 per unit of volatility. If you would invest  23,635  in SAP SE on October 24, 2024 and sell it today you would earn a total of  2,040  from holding SAP SE or generate 8.63% return on investment over 90 days.

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

Virtus Investment Partners  vs.  SAP SE

Virtus Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Virtus Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SAP SE

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, S A P unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Investment and S A P

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

The idea behind Virtus Investment Partners and SAP SE 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.