Correlation Between Virtus Select and Via Renewables

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

Diversification Opportunities for Virtus Select and Via Renewables

0.79

Correlation Coefficient

Virtus Select  Via Renewables

Poor diversification

The 3 months correlation between Virtus and Via is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Select Mlp and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Virtus Select i.e., Virtus Select and Via Renewables go up and down completely randomly.

Pair Corralation between Virtus Select and Via Renewables

Assuming the 90 days horizon Virtus Select Mlp is expected to generate 0.69 times more return on investment than Via Renewables. However, Virtus Select Mlp is 1.44 times less risky than Via Renewables. It trades about 0.33 of its potential returns per unit of risk. Via Renewables 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  272.00  from holding Virtus Select Mlp or generate 18.23% return on investment over 90 days.

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

Virtus Select Mlp  vs.  Via Renewables

Virtus Select Mlp

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Select Mlp are ranked lower than 25 (%) 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.

Via Renewables

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Virtus Select and Via Renewables

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

The idea behind Virtus Select Mlp and Via Renewables 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.