Correlation Between Formidable ETF and Virtus Real

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

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

Diversification Opportunities for Formidable ETF and Virtus Real

0.14

Correlation Coefficient

Formidable ETF  Virtus Real

Average diversification

The 3 months correlation between Formidable and Virtus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Formidable ETF and Virtus Real Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Real Asset and Formidable ETF 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 Formidable ETF are associated (or correlated) with Virtus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Real Asset has no effect on the direction of Formidable ETF i.e., Formidable ETF and Virtus Real go up and down completely randomly.

Pair Corralation between Formidable ETF and Virtus Real

Given the investment horizon of 90 days Formidable ETF is expected to under-perform the Virtus Real. In addition to that, Formidable ETF is 1.13 times more volatile than Virtus Real Asset. It trades about -0.08 of its total potential returns per unit of risk. Virtus Real Asset is currently generating about -0.01 per unit of volatility. If you would invest  2,433  in Virtus Real Asset on September 17, 2024 and sell it today you would lose (11.00) from holding Virtus Real Asset or give up 0.45% of portfolio value over 90 days.

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

Formidable ETF  vs.  Virtus Real Asset

Formidable ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Virtus Real Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Real Asset has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Virtus Real is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Formidable ETF and Virtus Real

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

The idea behind Formidable ETF and Virtus Real Asset 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.