Correlation Between Virtus Nfj and Federated Floating

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

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

Diversification Opportunities for Virtus Nfj and Federated Floating

0.28

Correlation Coefficient

Virtus Nfj  Federated Floating

Modest diversification

The 3 months correlation between Virtus and Federated is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Nfj Large Cap and Federated Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Floating Rate and Virtus Nfj 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 Nfj Large Cap are associated (or correlated) with Federated Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Floating Rate has no effect on the direction of Virtus Nfj i.e., Virtus Nfj and Federated Floating go up and down completely randomly.

Pair Corralation between Virtus Nfj and Federated Floating

Assuming the 90 days horizon Virtus Nfj Large Cap is expected to under-perform the Federated Floating. In addition to that, Virtus Nfj is 8.41 times more volatile than Federated Floating Rate. It trades about -0.09 of its total potential returns per unit of risk. Federated Floating Rate is currently generating about 0.1 per unit of volatility. If you would invest  860.00  in Federated Floating Rate on September 29, 2024 and sell it today you would earn a total of  5.00  from holding Federated Floating Rate or generate 0.58% return on investment over 90 days.

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

Virtus Nfj Large Cap  vs.  Federated Floating Rate

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.

Federated Floating Rate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Floating Rate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Floating 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 Nfj and Federated Floating

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

The idea behind Virtus Nfj Large Cap and Federated Floating Rate 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.