Correlation Between Virtus Kar and Amg Managers

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

Diversification Opportunities for Virtus Kar and Amg Managers

-0.53

Correlation Coefficient

Virtus Kar  Amg Managers

Excellent diversification

The 3 months correlation between Virtus and Amg is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Amg Managers Cadence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Cadence 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 Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Cadence has no effect on the direction of Virtus Kar i.e., Virtus Kar and Amg Managers go up and down completely randomly.

Pair Corralation between Virtus Kar and Amg Managers

Assuming the 90 days horizon Virtus Kar Small Cap is expected to under-perform the Amg Managers. In addition to that, Virtus Kar is 2.1 times more volatile than Amg Managers Cadence. It trades about -0.21 of its total potential returns per unit of risk. Amg Managers Cadence is currently generating about -0.17 per unit of volatility. If you would invest  4,800  in Amg Managers Cadence on September 21, 2024 and sell it today you would lose (148.00) from holding Amg Managers Cadence or give up 3.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Virtus Kar Small Cap  vs.  Amg Managers Cadence

Virtus Kar Small

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and 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.

Amg Managers Cadence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Managers Cadence has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Amg Managers

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

The idea behind Virtus Kar Small Cap and Amg Managers Cadence 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .