Correlation Between Virtus LifeSci and Exchange Traded

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

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

Diversification Opportunities for Virtus LifeSci and Exchange Traded

-0.28

Correlation Coefficient

Virtus LifeSci  Exchange Traded

Very good diversification

The 3 months correlation between Virtus and Exchange is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Virtus LifeSci Biotech and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts and Virtus LifeSci 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 LifeSci Biotech are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of Virtus LifeSci i.e., Virtus LifeSci and Exchange Traded go up and down completely randomly.

Pair Corralation between Virtus LifeSci and Exchange Traded

Considering the 90-day investment horizon Virtus LifeSci Biotech is expected to generate 0.35 times more return on investment than Exchange Traded. However, Virtus LifeSci Biotech is 2.86 times less risky than Exchange Traded. It trades about 0.03 of its potential returns per unit of risk. Exchange Traded Concepts is currently generating about -0.11 per unit of risk. If you would invest  4,979  in Virtus LifeSci Biotech on September 25, 2024 and sell it today you would earn a total of  1,047  from holding Virtus LifeSci Biotech or generate 21.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.02%
Values	Daily Returns

Virtus LifeSci Biotech  vs.  Exchange Traded Concepts

Virtus LifeSci Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus LifeSci Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Virtus LifeSci is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Exchange Traded is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus LifeSci and Exchange Traded

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

The idea behind Virtus LifeSci Biotech and Exchange Traded Concepts 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.