Correlation Between Virtus Kar and Virtus Multi

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

By analyzing existing cross correlation between Virtus Kar Small Cap and Virtus Multi Strategy Target, you can compare the effects of market volatilities on Virtus Kar and Virtus Multi 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 Kar with a short position of Virtus Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Virtus Multi.

Diversification Opportunities for Virtus Kar and Virtus Multi

0.19

Correlation Coefficient

Virtus Kar  Virtus Multi

Average diversification

The 3 months correlation between Virtus and Virtus is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Virtus Multi Strategy Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Strategy and Virtus Kar 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 Kar Small Cap are associated (or correlated) with Virtus Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Strategy has no effect on the direction of Virtus Kar i.e., Virtus Kar and Virtus Multi go up and down completely randomly.

Pair Corralation between Virtus Kar and Virtus Multi

Assuming the 90 days horizon Virtus Kar Small Cap is expected to under-perform the Virtus Multi. In addition to that, Virtus Kar is 14.8 times more volatile than Virtus Multi Strategy Target. It trades about -0.3 of its total potential returns per unit of risk. Virtus Multi Strategy Target is currently generating about -0.16 per unit of volatility. If you would invest  1,815  in Virtus Multi Strategy Target on September 25, 2024 and sell it today you would lose (11.00) from holding Virtus Multi Strategy Target or give up 0.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Virtus Kar Small Cap  vs.  Virtus Multi Strategy Target

Virtus Kar Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Virtus Kar and Virtus Multi

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

The idea behind Virtus Kar Small Cap and Virtus Multi Strategy Target 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.