Correlation Between Virtus Kar and Sit Quality

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

By analyzing existing cross correlation between Virtus Kar Small Mid and Sit Quality Income, you can compare the effects of market volatilities on Virtus Kar and Sit Quality 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 Kar with a short position of Sit Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Sit Quality.

Diversification Opportunities for Virtus Kar and Sit Quality

-0.59

Correlation Coefficient

Virtus Kar  Sit Quality

Excellent diversification

The 3 months correlation between Virtus and Sit is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Mid and Sit Quality Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Quality Income and Virtus Kar 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 Kar Small Mid are associated (or correlated) with Sit Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Quality Income has no effect on the direction of Virtus Kar i.e., Virtus Kar and Sit Quality go up and down completely randomly.

Pair Corralation between Virtus Kar and Sit Quality

Assuming the 90 days horizon Virtus Kar Small Mid is expected to generate 5.35 times more return on investment than Sit Quality. However, Virtus Kar is 5.35 times more volatile than Sit Quality Income. It trades about 0.2 of its potential returns per unit of risk. Sit Quality Income is currently generating about -0.04 per unit of risk. If you would invest  999.00  in Virtus Kar Small Mid on September 12, 2024 and sell it today you would earn a total of  109.00  from holding Virtus Kar Small Mid or generate 10.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Virtus Kar Small Mid  vs.  Sit Quality Income

Virtus Kar Small

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Mid are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Virtus Kar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sit Quality Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sit Quality Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sit Quality is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Kar and Sit Quality

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

The idea behind Virtus Kar Small Mid and Sit Quality Income 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.