Correlation Between Deutsche Munications and Virtus Select

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

By analyzing existing cross correlation between Deutsche Munications Fund and Virtus Select Mlp, you can compare the effects of market volatilities on Deutsche Munications and Virtus Select 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 Deutsche Munications with a short position of Virtus Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Munications and Virtus Select.

Diversification Opportunities for Deutsche Munications and Virtus Select

0.78

Correlation Coefficient

Deutsche Munications  Virtus Select

Poor diversification

The 3 months correlation between Deutsche and Virtus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Munications Fund and Virtus Select Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Select Mlp and Deutsche Munications 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 Deutsche Munications Fund are associated (or correlated) with Virtus Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Select Mlp has no effect on the direction of Deutsche Munications i.e., Deutsche Munications and Virtus Select go up and down completely randomly.

Pair Corralation between Deutsche Munications and Virtus Select

Assuming the 90 days horizon Deutsche Munications is expected to generate 1.13 times less return on investment than Virtus Select. But when comparing it to its historical volatility, Deutsche Munications Fund is 1.04 times less risky than Virtus Select. It trades about 0.17 of its potential returns per unit of risk. Virtus Select Mlp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,486  in Virtus Select Mlp on September 27, 2024 and sell it today you would earn a total of  176.00  from holding Virtus Select Mlp or generate 11.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Deutsche Munications Fund  vs.  Virtus Select Mlp

Deutsche Munications

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Munications Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Deutsche Munications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Virtus Select Mlp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Select Mlp are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Virtus Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Munications and Virtus Select

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

The idea behind Deutsche Munications Fund and Virtus Select Mlp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.