Correlation Between Virtus Dividend and The Midcap

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

By analyzing existing cross correlation between Virtus Dividend Interest and The Midcap Growth, you can compare the effects of market volatilities on Virtus Dividend and The Midcap 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 Virtus Dividend with a short position of The Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dividend and The Midcap.

Diversification Opportunities for Virtus Dividend and The Midcap

0.78

Correlation Coefficient

Virtus Dividend  The Midcap

Poor diversification

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

Pair Corralation between Virtus Dividend and The Midcap

Considering the 90-day investment horizon Virtus Dividend is expected to generate 2.3 times less return on investment than The Midcap. But when comparing it to its historical volatility, Virtus Dividend Interest is 1.36 times less risky than The Midcap. It trades about 0.13 of its potential returns per unit of risk. The Midcap Growth is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,626  in The Midcap Growth on August 31, 2024 and sell it today you would earn a total of  527.00  from holding The Midcap Growth or generate 11.39% return on investment over 90 days.

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

Virtus Dividend Interest  vs.  The Midcap Growth

Virtus Dividend Interest

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Dividend Interest are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady technical and fundamental indicators, Virtus Dividend is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Midcap Growth

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Midcap Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, The Midcap may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Virtus Dividend and The Midcap

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

The idea behind Virtus Dividend Interest and The Midcap Growth 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.