Correlation Between Virtus Kar and Virtus Rampart

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

Diversification Opportunities for Virtus Kar and Virtus Rampart

0.65

Correlation Coefficient

Virtus Kar  Virtus Rampart

Poor diversification

The 3 months correlation between Virtus and Virtus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Virtus Rampart Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Rampart Enhanced 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 Virtus Rampart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Rampart Enhanced has no effect on the direction of Virtus Kar i.e., Virtus Kar and Virtus Rampart go up and down completely randomly.

Pair Corralation between Virtus Kar and Virtus Rampart

Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 1.79 times more return on investment than Virtus Rampart. However, Virtus Kar is 1.79 times more volatile than Virtus Rampart Enhanced. It trades about 0.33 of its potential returns per unit of risk. Virtus Rampart Enhanced is currently generating about 0.21 per unit of risk. If you would invest  2,673  in Virtus Kar Small Cap on August 31, 2024 and sell it today you would earn a total of  258.00  from holding Virtus Kar Small Cap or generate 9.65% 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.  Virtus Rampart Enhanced

Virtus Kar Small

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Virtus Kar showed solid returns over the last few months and may actually be approaching a breakup point.

Virtus Rampart Enhanced

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Rampart Enhanced are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Rampart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Kar and Virtus Rampart

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

The idea behind Virtus Kar Small Cap and Virtus Rampart Enhanced 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.