Correlation Between Virtus Private and ProShares Inflation

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

By analyzing existing cross correlation between Virtus Private Credit and ProShares Inflation Expectations, you can compare the effects of market volatilities on Virtus Private and ProShares Inflation 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 Private with a short position of ProShares Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Private and ProShares Inflation.

Diversification Opportunities for Virtus Private and ProShares Inflation

0.14

Correlation Coefficient

Virtus Private  ProShares Inflation

Average diversification

The 3 months correlation between Virtus and ProShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Private Credit and ProShares Inflation Expectatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Inflation and Virtus Private 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 Private Credit are associated (or correlated) with ProShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Inflation has no effect on the direction of Virtus Private i.e., Virtus Private and ProShares Inflation go up and down completely randomly.

Pair Corralation between Virtus Private and ProShares Inflation

Considering the 90-day investment horizon Virtus Private Credit is expected to generate 1.53 times more return on investment than ProShares Inflation. However, Virtus Private is 1.53 times more volatile than ProShares Inflation Expectations. It trades about 0.11 of its potential returns per unit of risk. ProShares Inflation Expectations is currently generating about 0.01 per unit of risk. If you would invest  2,146  in Virtus Private Credit on September 22, 2024 and sell it today you would earn a total of  79.00  from holding Virtus Private Credit or generate 3.68% return on investment over 90 days.

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

Virtus Private Credit  vs.  ProShares Inflation Expectatio

Virtus Private Credit

Risk-Adjusted Performance

8 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Private Credit are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Virtus Private is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares Inflation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Inflation Expectations are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ProShares Inflation is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virtus Private and ProShares Inflation

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

The idea behind Virtus Private Credit and ProShares Inflation Expectations 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.