Correlation Between Blackrock Mid and Virtus Kar

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

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

Diversification Opportunities for Blackrock Mid and Virtus Kar

0.95

Correlation Coefficient

Blackrock Mid  Virtus Kar

Almost no diversification

The 3 months correlation between Blackrock and Virtus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Mid Cap and Virtus Kar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Mid and Blackrock Mid 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 Blackrock Mid Cap are associated (or correlated) with Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Mid has no effect on the direction of Blackrock Mid i.e., Blackrock Mid and Virtus Kar go up and down completely randomly.

Pair Corralation between Blackrock Mid and Virtus Kar

Assuming the 90 days horizon Blackrock Mid Cap is expected to generate 1.25 times more return on investment than Virtus Kar. However, Blackrock Mid is 1.25 times more volatile than Virtus Kar Mid Cap. It trades about 0.2 of its potential returns per unit of risk. Virtus Kar Mid Cap is currently generating about 0.14 per unit of risk. If you would invest  3,356  in Blackrock Mid Cap on September 12, 2024 and sell it today you would earn a total of  486.00  from holding Blackrock Mid Cap or generate 14.48% return on investment over 90 days.

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

Blackrock Mid Cap  vs.  Virtus Kar Mid Cap

Blackrock Mid Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Mid Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Virtus Kar Mid

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Mid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Virtus Kar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Mid and Virtus Kar

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

The idea behind Blackrock Mid Cap and Virtus Kar Mid Cap 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.