Correlation Between Gmo Asset and Virtus Bond

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

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

Diversification Opportunities for Gmo Asset and Virtus Bond

0.97

Correlation Coefficient

Gmo Asset  Virtus Bond

Almost no diversification

The 3 months correlation between Gmo and Virtus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Asset Allocation and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond Fund and Gmo Asset 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 Gmo Asset Allocation are associated (or correlated) with Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Gmo Asset i.e., Gmo Asset and Virtus Bond go up and down completely randomly.

Pair Corralation between Gmo Asset and Virtus Bond

Assuming the 90 days horizon Gmo Asset Allocation is expected to under-perform the Virtus Bond. In addition to that, Gmo Asset is 3.46 times more volatile than Virtus Bond Fund. It trades about -0.12 of its total potential returns per unit of risk. Virtus Bond Fund is currently generating about -0.05 per unit of volatility. If you would invest  996.00  in Virtus Bond Fund on August 31, 2024 and sell it today you would lose (9.00) from holding Virtus Bond Fund or give up 0.9% of portfolio value over 90 days.

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

Gmo Asset Allocation  vs.  Virtus Bond Fund

Gmo Asset Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Virtus Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gmo Asset and Virtus Bond

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

The idea behind Gmo Asset Allocation and Virtus Bond Fund 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.