Correlation Between Virtus Multi and Madison Moderate

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

By analyzing existing cross correlation between Virtus Multi Strategy Target and Madison Moderate Allocation, you can compare the effects of market volatilities on Virtus Multi and Madison Moderate 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 Multi with a short position of Madison Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Multi and Madison Moderate.

Diversification Opportunities for Virtus Multi and Madison Moderate

0.61

Correlation Coefficient

Virtus Multi  Madison Moderate

Poor diversification

The 3 months correlation between Virtus and Madison is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Strategy Target and Madison Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Moderate All and Virtus Multi 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 Multi Strategy Target are associated (or correlated) with Madison Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Moderate All has no effect on the direction of Virtus Multi i.e., Virtus Multi and Madison Moderate go up and down completely randomly.

Pair Corralation between Virtus Multi and Madison Moderate

Assuming the 90 days horizon Virtus Multi Strategy Target is expected to generate 0.35 times more return on investment than Madison Moderate. However, Virtus Multi Strategy Target is 2.88 times less risky than Madison Moderate. It trades about 0.22 of its potential returns per unit of risk. Madison Moderate Allocation is currently generating about -0.01 per unit of risk. If you would invest  1,794  in Virtus Multi Strategy Target on October 25, 2024 and sell it today you would earn a total of  16.00  from holding Virtus Multi Strategy Target or generate 0.89% return on investment over 90 days.

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

Virtus Multi Strategy Target  vs.  Madison Moderate Allocation

Virtus Multi Strategy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Multi Strategy Target are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Madison Moderate All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison Moderate Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Madison Moderate 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 Multi and Madison Moderate

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

The idea behind Virtus Multi Strategy Target and Madison Moderate Allocation 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.