Correlation Between Dunham Porategovernment and Virtus Multi

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

By analyzing existing cross correlation between Dunham Porategovernment Bond and Virtus Multi Strategy Target, you can compare the effects of market volatilities on Dunham Porategovernment and Virtus Multi 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 Dunham Porategovernment with a short position of Virtus Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Porategovernment and Virtus Multi.

Diversification Opportunities for Dunham Porategovernment and Virtus Multi

0.64

Correlation Coefficient

Dunham Porategovernment  Virtus Multi

Poor diversification

The 3 months correlation between Dunham and Virtus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Virtus Multi Strategy Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Strategy and Dunham Porategovernment 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 Dunham Porategovernment Bond are associated (or correlated) with Virtus Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Strategy has no effect on the direction of Dunham Porategovernment i.e., Dunham Porategovernment and Virtus Multi go up and down completely randomly.

Pair Corralation between Dunham Porategovernment and Virtus Multi

Assuming the 90 days horizon Dunham Porategovernment Bond is expected to under-perform the Virtus Multi. In addition to that, Dunham Porategovernment is 1.46 times more volatile than Virtus Multi Strategy Target. It trades about -0.15 of its total potential returns per unit of risk. Virtus Multi Strategy Target is currently generating about 0.04 per unit of volatility. If you would invest  1,819  in Virtus Multi Strategy Target on September 14, 2024 and sell it today you would earn a total of  8.00  from holding Virtus Multi Strategy Target or generate 0.44% return on investment over 90 days.

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

Dunham Porategovernment Bond  vs.  Virtus Multi Strategy Target

Dunham Porategovernment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dunham Porategovernment Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dunham Porategovernment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Multi Strategy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Multi Strategy Target are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dunham Porategovernment and Virtus Multi

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

The idea behind Dunham Porategovernment Bond and Virtus Multi Strategy Target 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.