Correlation Between Main Thematic and Virtus Real

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

By analyzing existing cross correlation between Main Thematic Innovation and Virtus Real Asset, you can compare the effects of market volatilities on Main Thematic and Virtus Real 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 Main Thematic with a short position of Virtus Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Thematic and Virtus Real.

Diversification Opportunities for Main Thematic and Virtus Real

0.33

Correlation Coefficient

Main Thematic  Virtus Real

Weak diversification

The 3 months correlation between Main and Virtus is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Main Thematic Innovation and Virtus Real Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Real Asset and Main Thematic 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 Main Thematic Innovation are associated (or correlated) with Virtus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Real Asset has no effect on the direction of Main Thematic i.e., Main Thematic and Virtus Real go up and down completely randomly.

Pair Corralation between Main Thematic and Virtus Real

Given the investment horizon of 90 days Main Thematic Innovation is expected to generate 2.23 times more return on investment than Virtus Real. However, Main Thematic is 2.23 times more volatile than Virtus Real Asset. It trades about 0.27 of its potential returns per unit of risk. Virtus Real Asset is currently generating about -0.01 per unit of risk. If you would invest  1,708  in Main Thematic Innovation on September 17, 2024 and sell it today you would earn a total of  448.00  from holding Main Thematic Innovation or generate 26.23% return on investment over 90 days.

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

Main Thematic Innovation  vs.  Virtus Real Asset

Main Thematic Innovation

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Thematic Innovation are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Main Thematic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Virtus Real Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Real Asset has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Virtus Real is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Main Thematic and Virtus Real

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

The idea behind Main Thematic Innovation and Virtus Real Asset 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.