Correlation Between Virtus High and Ab Sustainable

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

By analyzing existing cross correlation between Virtus High Yield and Ab Sustainable Thematic, you can compare the effects of market volatilities on Virtus High and Ab Sustainable 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 High with a short position of Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus High and Ab Sustainable.

Diversification Opportunities for Virtus High and Ab Sustainable

-0.25

Correlation Coefficient

Virtus High  Ab Sustainable

Very good diversification

The 3 months correlation between Virtus and SUTAX is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Virtus High Yield and Ab Sustainable Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Thematic and Virtus High 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 High Yield are associated (or correlated) with Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Thematic has no effect on the direction of Virtus High i.e., Virtus High and Ab Sustainable go up and down completely randomly.

Pair Corralation between Virtus High and Ab Sustainable

Assuming the 90 days horizon Virtus High Yield is expected to generate 0.06 times more return on investment than Ab Sustainable. However, Virtus High Yield is 16.85 times less risky than Ab Sustainable. It trades about 0.04 of its potential returns per unit of risk. Ab Sustainable Thematic is currently generating about -0.19 per unit of risk. If you would invest  387.00  in Virtus High Yield on October 9, 2024 and sell it today you would earn a total of  1.00  from holding Virtus High Yield or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Virtus High Yield  vs.  Ab Sustainable Thematic

Virtus High Yield

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus High Yield are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Sustainable Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Sustainable Thematic has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Virtus High and Ab Sustainable

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

The idea behind Virtus High Yield and Ab Sustainable Thematic 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.