Correlation Between Virtus Dividend and New Economy

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Can any of the company-specific risk be diversified away by investing in both Virtus Dividend and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Virtus Dividend and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dividend and New Economy.

Diversification Opportunities for Virtus Dividend and New Economy

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Virtus and New is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dividend Interest and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Virtus Dividend i.e., Virtus Dividend and New Economy go up and down completely randomly.

Pair Corralation between Virtus Dividend and New Economy

Considering the 90-day investment horizon Virtus Dividend Interest is expected to under-perform the New Economy. But the fund apears to be less risky and, when comparing its historical volatility, Virtus Dividend Interest is 2.33 times less risky than New Economy. The fund trades about -0.05 of its potential returns per unit of risk. The New Economy Fund is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6,566  in New Economy Fund on September 19, 2024 and sell it today you would lose (116.00) from holding New Economy Fund or give up 1.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.44%
ValuesDaily Returns

Virtus Dividend Interest  vs.  New Economy Fund

 Performance 
       Timeline  
Virtus Dividend Interest 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Virtus Dividend Interest has generated negative risk-adjusted returns adding no value to fund investors. 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.
New Economy Fund 

Risk-Adjusted Performance

0 of 100

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

Virtus Dividend and New Economy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Virtus Dividend and New Economy

The main advantage of trading using opposite Virtus Dividend and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Dividend position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.
The idea behind Virtus Dividend Interest and New Economy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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