Correlation Between Virtus Dfa and Dennys Corp

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

By analyzing existing cross correlation between Virtus Dfa 2040 and Dennys Corp, you can compare the effects of market volatilities on Virtus Dfa and Dennys Corp 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 Dfa with a short position of Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and Dennys Corp.

Diversification Opportunities for Virtus Dfa and Dennys Corp

0.4

Correlation Coefficient

Virtus Dfa  Dennys Corp

Very weak diversification

The 3 months correlation between Virtus and Dennys is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp and Virtus Dfa 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 Dfa 2040 are associated (or correlated) with Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Virtus Dfa i.e., Virtus Dfa and Dennys Corp go up and down completely randomly.

Pair Corralation between Virtus Dfa and Dennys Corp

Assuming the 90 days horizon Virtus Dfa 2040 is expected to generate 0.32 times more return on investment than Dennys Corp. However, Virtus Dfa 2040 is 3.1 times less risky than Dennys Corp. It trades about 0.05 of its potential returns per unit of risk. Dennys Corp is currently generating about -0.04 per unit of risk. If you would invest  885.00  in Virtus Dfa 2040 on October 4, 2024 and sell it today you would earn a total of  167.00  from holding Virtus Dfa 2040 or generate 18.87% return on investment over 90 days.

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

Virtus Dfa 2040  vs.  Dennys Corp

Virtus Dfa 2040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dfa 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dennys Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dennys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dennys Corp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Virtus Dfa and Dennys Corp

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

The idea behind Virtus Dfa 2040 and Dennys Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.