Correlation Between Virtus Real and Clearbridge Appreciation

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

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

Diversification Opportunities for Virtus Real and Clearbridge Appreciation

0.36

Correlation Coefficient

Virtus Real  Clearbridge Appreciation

Weak diversification

The 3 months correlation between Virtus and Clearbridge is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Real Estate and Clearbridge Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Appreciation and Virtus Real 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 Real Estate are associated (or correlated) with Clearbridge Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Appreciation has no effect on the direction of Virtus Real i.e., Virtus Real and Clearbridge Appreciation go up and down completely randomly.

Pair Corralation between Virtus Real and Clearbridge Appreciation

Assuming the 90 days horizon Virtus Real Estate is expected to under-perform the Clearbridge Appreciation. In addition to that, Virtus Real is 1.32 times more volatile than Clearbridge Appreciation Fund. It trades about -0.02 of its total potential returns per unit of risk. Clearbridge Appreciation Fund is currently generating about 0.16 per unit of volatility. If you would invest  3,451  in Clearbridge Appreciation Fund on September 12, 2024 and sell it today you would earn a total of  225.00  from holding Clearbridge Appreciation Fund or generate 6.52% return on investment over 90 days.

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

Virtus Real Estate  vs.  Clearbridge Appreciation Fund

Virtus Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Clearbridge Appreciation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Appreciation Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Clearbridge Appreciation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virtus Real and Clearbridge Appreciation

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

The idea behind Virtus Real Estate and Clearbridge Appreciation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.