Correlation Between Virtus Kar and Simt Managed

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

By analyzing existing cross correlation between Virtus Kar Small Cap and Simt Managed Volatility, you can compare the effects of market volatilities on Virtus Kar and Simt Managed 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 Kar with a short position of Simt Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Simt Managed.

Diversification Opportunities for Virtus Kar and Simt Managed

0.7

Correlation Coefficient

Virtus Kar  Simt Managed

Poor diversification

The 3 months correlation between Virtus and Simt is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Simt Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Managed Volatility and Virtus Kar 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 Kar Small Cap are associated (or correlated) with Simt Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Managed Volatility has no effect on the direction of Virtus Kar i.e., Virtus Kar and Simt Managed go up and down completely randomly.

Pair Corralation between Virtus Kar and Simt Managed

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 0.55 times more return on investment than Simt Managed. However, Virtus Kar Small Cap is 1.81 times less risky than Simt Managed. It trades about 0.05 of its potential returns per unit of risk. Simt Managed Volatility is currently generating about -0.1 per unit of risk. If you would invest  4,035  in Virtus Kar Small Cap on September 19, 2024 and sell it today you would earn a total of  107.00  from holding Virtus Kar Small Cap or generate 2.65% return on investment over 90 days.

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

Virtus Kar Small Cap  vs.  Simt Managed Volatility

Virtus Kar Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Managed Volatility

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Virtus Kar and Simt Managed

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

The idea behind Virtus Kar Small Cap and Simt Managed Volatility 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.