Correlation Between Federated Mdt and Virtus International

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

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

Diversification Opportunities for Federated Mdt and Virtus International

-0.56

Correlation Coefficient

Federated Mdt  Virtus International

Excellent diversification

The 3 months correlation between Federated and Virtus is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Small and Virtus International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus International and Federated Mdt 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 Federated Mdt Small are associated (or correlated) with Virtus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus International has no effect on the direction of Federated Mdt i.e., Federated Mdt and Virtus International go up and down completely randomly.

Pair Corralation between Federated Mdt and Virtus International

Assuming the 90 days horizon Federated Mdt Small is expected to generate 1.68 times more return on investment than Virtus International. However, Federated Mdt is 1.68 times more volatile than Virtus International Small Cap. It trades about 0.18 of its potential returns per unit of risk. Virtus International Small Cap is currently generating about -0.04 per unit of risk. If you would invest  2,535  in Federated Mdt Small on September 5, 2024 and sell it today you would earn a total of  353.00  from holding Federated Mdt Small or generate 13.93% return on investment over 90 days.

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

Federated Mdt Small  vs.  Virtus International Small Cap

Federated Mdt Small

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Federated Mdt showed solid returns over the last few months and may actually be approaching a breakup point.

Virtus International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Federated Mdt and Virtus International

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

The idea behind Federated Mdt Small and Virtus International Small Cap 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.