Correlation Between Virtus Multi-strategy and Inverse Emerging

Can any of the company-specific risk be diversified away by investing in both Virtus Multi-strategy and Inverse Emerging 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-strategy and Inverse Emerging 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 Inverse Emerging Markets, you can compare the effects of market volatilities on Virtus Multi-strategy and Inverse Emerging 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-strategy with a short position of Inverse Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Multi-strategy and Inverse Emerging.

Diversification Opportunities for Virtus Multi-strategy and Inverse Emerging

-0.02

Correlation Coefficient

Virtus Multi-strategy  Inverse Emerging

Good diversification

The 3 months correlation between Virtus and Inverse is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Strategy Target and Inverse Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Emerging Markets and Virtus Multi-strategy 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 Inverse Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Emerging Markets has no effect on the direction of Virtus Multi-strategy i.e., Virtus Multi-strategy and Inverse Emerging go up and down completely randomly.

Pair Corralation between Virtus Multi-strategy and Inverse Emerging

Assuming the 90 days horizon Virtus Multi Strategy Target is expected to under-perform the Inverse Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Multi Strategy Target is 10.74 times less risky than Inverse Emerging. The mutual fund trades about -0.28 of its potential returns per unit of risk. The Inverse Emerging Markets is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  812.00  in Inverse Emerging Markets on October 11, 2024 and sell it today you would earn a total of  50.00  from holding Inverse Emerging Markets or generate 6.16% return on investment over 90 days.

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

Virtus Multi Strategy Target  vs.  Inverse Emerging Markets

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-strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Inverse Emerging Markets

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Inverse Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Multi-strategy and Inverse Emerging

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

The idea behind Virtus Multi Strategy Target and Inverse Emerging Markets 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.