Correlation Between Virtus WMC and HDAW

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

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

Diversification Opportunities for Virtus WMC and HDAW

0.0

Correlation Coefficient

Virtus WMC  HDAW

Pay attention - limited upside

The 3 months correlation between Virtus and HDAW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Virtus WMC International and HDAW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDAW and Virtus WMC 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 WMC International are associated (or correlated) with HDAW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDAW has no effect on the direction of Virtus WMC i.e., Virtus WMC and HDAW go up and down completely randomly.

Pair Corralation between Virtus WMC and HDAW

If you would invest  2,659  in Virtus WMC International on December 26, 2024 and sell it today you would earn a total of  338.00  from holding Virtus WMC International or generate 12.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Virtus WMC International  vs.  HDAW

Virtus WMC International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus WMC International are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Virtus WMC exhibited solid returns over the last few months and may actually be approaching a breakup point.

HDAW

Risk-Adjusted Performance

Very Weak

Over the last 90 days HDAW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HDAW is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Virtus WMC and HDAW

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

The idea behind Virtus WMC International and HDAW 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.