Correlation Between Virtus WMC and STF Tactical

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

Diversification Opportunities for Virtus WMC and STF Tactical

-0.74

Correlation Coefficient

Virtus WMC  STF Tactical

Pay attention - limited upside

The 3 months correlation between Virtus and STF is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Virtus WMC International and STF Tactical Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STF Tactical Growth 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 STF Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STF Tactical Growth has no effect on the direction of Virtus WMC i.e., Virtus WMC and STF Tactical go up and down completely randomly.

Pair Corralation between Virtus WMC and STF Tactical

Given the investment horizon of 90 days Virtus WMC International is expected to under-perform the STF Tactical. But the etf apears to be less risky and, when comparing its historical volatility, Virtus WMC International is 1.49 times less risky than STF Tactical. The etf trades about -0.11 of its potential returns per unit of risk. The STF Tactical Growth is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,245  in STF Tactical Growth on September 15, 2024 and sell it today you would earn a total of  365.00  from holding STF Tactical Growth or generate 11.25% return on investment over 90 days.

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

Virtus WMC International  vs.  STF Tactical Growth

Virtus WMC International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus WMC International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Virtus WMC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

STF Tactical Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STF Tactical Growth are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, STF Tactical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virtus WMC and STF Tactical

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

The idea behind Virtus WMC International and STF Tactical Growth 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 Transaction History module to view history of all your transactions and understand their impact on performance.