Correlation Between Vanguard Short and Virtus ETF

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

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

Diversification Opportunities for Vanguard Short and Virtus ETF

0.46

Correlation Coefficient

Vanguard Short  Virtus ETF

Very weak diversification

The 3 months correlation between Vanguard and Virtus is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Inflation and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust and Vanguard Short 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 Vanguard Short Term Inflation Protected are associated (or correlated) with Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Vanguard Short i.e., Vanguard Short and Virtus ETF go up and down completely randomly.

Pair Corralation between Vanguard Short and Virtus ETF

Given the investment horizon of 90 days Vanguard Short is expected to generate 2.42 times less return on investment than Virtus ETF. But when comparing it to its historical volatility, Vanguard Short Term Inflation Protected is 3.39 times less risky than Virtus ETF. It trades about 0.2 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,443  in Virtus ETF Trust on September 24, 2024 and sell it today you would earn a total of  215.00  from holding Virtus ETF Trust or generate 8.8% return on investment over 90 days.

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

Vanguard Short Term Inflation   vs.  Virtus ETF Trust

Vanguard Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Short Term Inflation Protected has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Vanguard Short is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Virtus ETF Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Virtus ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Short and Virtus ETF

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

The idea behind Vanguard Short Term Inflation Protected and Virtus ETF Trust 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.