Correlation Between Exchange Traded and Virtus LifeSci

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

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

Diversification Opportunities for Exchange Traded and Virtus LifeSci

0.31

Correlation Coefficient

Exchange Traded  Virtus LifeSci

Weak diversification

The 3 months correlation between Exchange and Virtus is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and Virtus LifeSci Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus LifeSci Biotech and Exchange Traded 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 Exchange Traded Concepts are associated (or correlated) with Virtus LifeSci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus LifeSci Biotech has no effect on the direction of Exchange Traded i.e., Exchange Traded and Virtus LifeSci go up and down completely randomly.

Pair Corralation between Exchange Traded and Virtus LifeSci

Given the investment horizon of 90 days Exchange Traded Concepts is expected to under-perform the Virtus LifeSci. In addition to that, Exchange Traded is 1.93 times more volatile than Virtus LifeSci Biotech. It trades about -0.11 of its total potential returns per unit of risk. Virtus LifeSci Biotech is currently generating about 0.01 per unit of volatility. If you would invest  2,481  in Virtus LifeSci Biotech on September 25, 2024 and sell it today you would lose (48.00) from holding Virtus LifeSci Biotech or give up 1.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.02%
Values	Daily Returns

Exchange Traded Concepts  vs.  Virtus LifeSci Biotech

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.

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. In spite of latest weak performance, the Etf's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Exchange Traded and Virtus LifeSci

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

The idea behind Exchange Traded Concepts and Virtus LifeSci Biotech 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.