Correlation Between Virtus Multi and Virtus Rampart

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

Diversification Opportunities for Virtus Multi and Virtus Rampart

0.54

Correlation Coefficient

Virtus Multi  Virtus Rampart

Very weak diversification

The 3 months correlation between Virtus and Virtus is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Strategy Target and Virtus Rampart Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Rampart Enhanced 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 Rampart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Rampart Enhanced has no effect on the direction of Virtus Multi i.e., Virtus Multi and Virtus Rampart go up and down completely randomly.

Pair Corralation between Virtus Multi and Virtus Rampart

Assuming the 90 days horizon Virtus Multi Strategy Target is expected to generate 0.16 times more return on investment than Virtus Rampart. However, Virtus Multi Strategy Target is 6.38 times less risky than Virtus Rampart. It trades about -0.32 of its potential returns per unit of risk. Virtus Rampart Enhanced is currently generating about -0.28 per unit of risk. If you would invest  1,822  in Virtus Multi Strategy Target on October 4, 2024 and sell it today you would lose (25.00) from holding Virtus Multi Strategy Target or give up 1.37% of portfolio value 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 Rampart Enhanced

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 Rampart Enhanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Rampart Enhanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Virtus Rampart 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 Rampart

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

The idea behind Virtus Multi Strategy Target and Virtus Rampart Enhanced 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.