Correlation Between Us Global and Virtus Bond

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

By analyzing existing cross correlation between Us Global Leaders and Virtus Bond Fund, you can compare the effects of market volatilities on Us Global and Virtus Bond 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 Us Global with a short position of Virtus Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Global and Virtus Bond.

Diversification Opportunities for Us Global and Virtus Bond

-0.63

Correlation Coefficient

Us Global  Virtus Bond

Excellent diversification

The 3 months correlation between USGLX and Virtus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Us Global Leaders and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond Fund and Us Global 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 Us Global Leaders are associated (or correlated) with Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Us Global i.e., Us Global and Virtus Bond go up and down completely randomly.

Pair Corralation between Us Global and Virtus Bond

Assuming the 90 days horizon Us Global Leaders is expected to generate 2.76 times more return on investment than Virtus Bond. However, Us Global is 2.76 times more volatile than Virtus Bond Fund. It trades about 0.14 of its potential returns per unit of risk. Virtus Bond Fund is currently generating about -0.05 per unit of risk. If you would invest  7,099  in Us Global Leaders on August 31, 2024 and sell it today you would earn a total of  480.00  from holding Us Global Leaders or generate 6.76% return on investment over 90 days.

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

Us Global Leaders  vs.  Virtus Bond Fund

Us Global Leaders

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Us Global Leaders are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Us Global may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Virtus Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Us Global and Virtus Bond

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

The idea behind Us Global Leaders and Virtus Bond Fund 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.