Correlation Between Virtus Emerging and Virtus Multi

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

By analyzing existing cross correlation between Virtus Emerging Markets and Virtus Multi Strategy Target, you can compare the effects of market volatilities on Virtus Emerging and Virtus Multi 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 Emerging with a short position of Virtus Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Emerging and Virtus Multi.

Diversification Opportunities for Virtus Emerging and Virtus Multi

0.4

Correlation Coefficient

Virtus Emerging  Virtus Multi

Very weak diversification

The 3 months correlation between Virtus and Virtus is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Emerging Markets and Virtus Multi Strategy Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Strategy and Virtus Emerging 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 Emerging Markets are associated (or correlated) with Virtus Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Strategy has no effect on the direction of Virtus Emerging i.e., Virtus Emerging and Virtus Multi go up and down completely randomly.

Pair Corralation between Virtus Emerging and Virtus Multi

Assuming the 90 days horizon Virtus Emerging Markets is expected to under-perform the Virtus Multi. In addition to that, Virtus Emerging is 3.41 times more volatile than Virtus Multi Strategy Target. It trades about -0.23 of its total potential returns per unit of risk. Virtus Multi Strategy Target is currently generating about -0.14 per unit of volatility. If you would invest  1,826  in Virtus Multi Strategy Target on October 1, 2024 and sell it today you would lose (32.00) from holding Virtus Multi Strategy Target or give up 1.75% of portfolio value over 90 days.

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

Virtus Emerging Markets  vs.  Virtus Multi Strategy Target

Virtus Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Virtus Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Multi Strategy Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Virtus Multi 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 Emerging and Virtus Multi

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

The idea behind Virtus Emerging Markets and Virtus Multi Strategy Target 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.