Correlation Between Virtus Real and Formidable ETF

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

By analyzing existing cross correlation between Virtus Real Asset and Formidable ETF, you can compare the effects of market volatilities on Virtus Real and Formidable ETF 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 Real with a short position of Formidable ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Real and Formidable ETF.

Diversification Opportunities for Virtus Real and Formidable ETF

0.18

Correlation Coefficient

Virtus Real  Formidable ETF

Average diversification

The 3 months correlation between Virtus and Formidable is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Real Asset and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF and Virtus Real 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 Real Asset are associated (or correlated) with Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Virtus Real i.e., Virtus Real and Formidable ETF go up and down completely randomly.

Pair Corralation between Virtus Real and Formidable ETF

Given the investment horizon of 90 days Virtus Real Asset is expected to generate 0.89 times more return on investment than Formidable ETF. However, Virtus Real Asset is 1.13 times less risky than Formidable ETF. It trades about 0.01 of its potential returns per unit of risk. Formidable ETF is currently generating about -0.07 per unit of risk. If you would invest  2,440  in Virtus Real Asset on September 14, 2024 and sell it today you would earn a total of  11.00  from holding Virtus Real Asset or generate 0.45% return on investment over 90 days.

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

Virtus Real Asset  vs.  Formidable ETF

Virtus Real Asset

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Real Asset are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Virtus Real is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Formidable ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Virtus Real and Formidable ETF

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

The idea behind Virtus Real Asset and Formidable ETF 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.