Correlation Between Short Oil and Virtus Nfj

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

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

Diversification Opportunities for Short Oil and Virtus Nfj

-0.79

Correlation Coefficient

Short Oil  Virtus Nfj

Pay attention - limited upside

The 3 months correlation between Short and Virtus is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Virtus Nfj Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Nfj Large and Short Oil 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 Short Oil Gas are associated (or correlated) with Virtus Nfj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Nfj Large has no effect on the direction of Short Oil i.e., Short Oil and Virtus Nfj go up and down completely randomly.

Pair Corralation between Short Oil and Virtus Nfj

Assuming the 90 days horizon Short Oil is expected to generate 3.7 times less return on investment than Virtus Nfj. In addition to that, Short Oil is 1.43 times more volatile than Virtus Nfj Large Cap. It trades about 0.01 of its total potential returns per unit of risk. Virtus Nfj Large Cap is currently generating about 0.05 per unit of volatility. If you would invest  2,219  in Virtus Nfj Large Cap on September 21, 2024 and sell it today you would earn a total of  547.00  from holding Virtus Nfj Large Cap or generate 24.65% return on investment over 90 days.

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

Short Oil Gas  vs.  Virtus Nfj Large Cap

Short Oil Gas

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Oil Gas are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Virtus Nfj Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Short Oil and Virtus Nfj

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

The idea behind Short Oil Gas and Virtus Nfj Large 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.