Correlation Between Virtus Select and Oil Gas

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

By analyzing existing cross correlation between Virtus Select Mlp and Oil Gas Ultrasector, you can compare the effects of market volatilities on Virtus Select and Oil Gas 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 Select with a short position of Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Select and Oil Gas.

Diversification Opportunities for Virtus Select and Oil Gas

0.86

Correlation Coefficient

Virtus Select  Oil Gas

Very poor diversification

The 3 months correlation between Virtus and Oil is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Select Mlp and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector and Virtus Select 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 Select Mlp are associated (or correlated) with Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Virtus Select i.e., Virtus Select and Oil Gas go up and down completely randomly.

Pair Corralation between Virtus Select and Oil Gas

Assuming the 90 days horizon Virtus Select Mlp is expected to generate 0.46 times more return on investment than Oil Gas. However, Virtus Select Mlp is 2.17 times less risky than Oil Gas. It trades about 0.34 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about 0.09 per unit of risk. If you would invest  1,492  in Virtus Select Mlp on August 31, 2024 and sell it today you would earn a total of  290.00  from holding Virtus Select Mlp or generate 19.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Virtus Select Mlp  vs.  Oil Gas Ultrasector

Virtus Select Mlp

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Select Mlp are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Virtus Select showed solid returns over the last few months and may actually be approaching a breakup point.

Oil Gas Ultrasector

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Gas Ultrasector are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oil Gas may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Virtus Select and Oil Gas

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

The idea behind Virtus Select Mlp and Oil Gas Ultrasector 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.