Correlation Between Virtus Multi and Virtus Tactical

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

Diversification Opportunities for Virtus Multi and Virtus Tactical

0.45

Correlation Coefficient

Virtus Multi  Virtus Tactical

Very weak diversification

The 3 months correlation between Virtus and Virtus is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Strategy Target and Virtus Tactical Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Tactical Allo 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 Virtus Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Tactical Allo has no effect on the direction of Virtus Multi i.e., Virtus Multi and Virtus Tactical go up and down completely randomly.

Pair Corralation between Virtus Multi and Virtus Tactical

Assuming the 90 days horizon Virtus Multi Strategy Target is expected to under-perform the Virtus Tactical. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Multi Strategy Target is 2.76 times less risky than Virtus Tactical. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Virtus Tactical Allocation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,184  in Virtus Tactical Allocation on September 17, 2024 and sell it today you would earn a total of  45.00  from holding Virtus Tactical Allocation or generate 3.8% return on investment over 90 days.

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

Virtus Multi Strategy Target  vs.  Virtus Tactical Allocation

Virtus Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Multi Strategy Target has generated negative risk-adjusted returns adding no value to fund investors. 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.

Virtus Tactical Allo

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Tactical Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Tactical 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 Virtus Tactical

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

The idea behind Virtus Multi Strategy Target and Virtus Tactical 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.