Correlation Between Virtus Kar and Federated Mdt

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

By analyzing existing cross correlation between Virtus Kar Mid Cap and Federated Mdt Mid Cap, you can compare the effects of market volatilities on Virtus Kar and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Federated Mdt.

Diversification Opportunities for Virtus Kar and Federated Mdt

0.65

Correlation Coefficient

Virtus Kar  Federated Mdt

Poor diversification

The 3 months correlation between Virtus and Federated is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Mid Cap and Federated Mdt Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Mid 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 Mid Cap are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Mid has no effect on the direction of Virtus Kar i.e., Virtus Kar and Federated Mdt go up and down completely randomly.

Pair Corralation between Virtus Kar and Federated Mdt

Assuming the 90 days horizon Virtus Kar Mid Cap is expected to generate 0.53 times more return on investment than Federated Mdt. However, Virtus Kar Mid Cap is 1.9 times less risky than Federated Mdt. It trades about -0.32 of its potential returns per unit of risk. Federated Mdt Mid Cap is currently generating about -0.33 per unit of risk. If you would invest  5,472  in Virtus Kar Mid Cap on October 5, 2024 and sell it today you would lose (332.00) from holding Virtus Kar Mid Cap or give up 6.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Virtus Kar Mid Cap  vs.  Federated Mdt Mid Cap

Virtus Kar Mid

Risk-Adjusted Performance

0 of 100

Very Weak

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

Federated Mdt Mid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Mid Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Federated Mdt may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Virtus Kar and Federated Mdt

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

The idea behind Virtus Kar Mid Cap and Federated Mdt Mid Cap 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 Global Correlations module to find global opportunities by holding instruments from different markets.