Correlation Between Virtus Dfa and Malaga Financial

Can any of the company-specific risk be diversified away by investing in both Virtus Dfa and Malaga Financial 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 Malaga Financial 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 Malaga Financial, you can compare the effects of market volatilities on Virtus Dfa and Malaga Financial 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 Malaga Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and Malaga Financial.

Diversification Opportunities for Virtus Dfa and Malaga Financial

-0.47

Correlation Coefficient

Virtus Dfa  Malaga Financial

Very good diversification

The 3 months correlation between Virtus and Malaga is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial 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 Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Virtus Dfa i.e., Virtus Dfa and Malaga Financial go up and down completely randomly.

Pair Corralation between Virtus Dfa and Malaga Financial

Assuming the 90 days horizon Virtus Dfa 2040 is expected to under-perform the Malaga Financial. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Dfa 2040 is 1.5 times less risky than Malaga Financial. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Malaga Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,138  in Malaga Financial on October 5, 2024 and sell it today you would earn a total of  102.00  from holding Malaga Financial or generate 4.77% return on investment over 90 days.

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

Virtus Dfa 2040  vs.  Malaga Financial

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.

Malaga Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malaga Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Malaga Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Virtus Dfa and Malaga Financial

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

The idea behind Virtus Dfa 2040 and Malaga Financial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.