Correlation Between Virtus Global and Millerhoward High

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

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

Diversification Opportunities for Virtus Global and Millerhoward High

0.61

Correlation Coefficient

Virtus Global  Millerhoward High

Poor diversification

The 3 months correlation between Virtus and Millerhoward is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Global Multi and Millerhoward High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millerhoward High Income and Virtus 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 Virtus Global Multi are associated (or correlated) with Millerhoward High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millerhoward High Income has no effect on the direction of Virtus Global i.e., Virtus Global and Millerhoward High go up and down completely randomly.

Pair Corralation between Virtus Global and Millerhoward High

Considering the 90-day investment horizon Virtus Global is expected to generate 1.39 times less return on investment than Millerhoward High. But when comparing it to its historical volatility, Virtus Global Multi is 1.3 times less risky than Millerhoward High. It trades about 0.2 of its potential returns per unit of risk. Millerhoward High Income is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,080  in Millerhoward High Income on September 12, 2024 and sell it today you would earn a total of  176.00  from holding Millerhoward High Income or generate 16.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.32%
Values	Daily Returns

Virtus Global Multi  vs.  Millerhoward High Income

Virtus Global Multi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Global Multi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Virtus Global is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Millerhoward High Income

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Millerhoward High Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather inconsistent forward indicators, Millerhoward High may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virtus Global and Millerhoward High

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

The idea behind Virtus Global Multi and Millerhoward High Income 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 Transaction History module to view history of all your transactions and understand their impact on performance.