Correlation Between Virtus Investment and Arcosa

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

By analyzing existing cross correlation between Virtus Investment Partners and Arcosa Inc, you can compare the effects of market volatilities on Virtus Investment and Arcosa 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 Investment with a short position of Arcosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Investment and Arcosa.

Diversification Opportunities for Virtus Investment and Arcosa

0.97

Correlation Coefficient

Virtus Investment  Arcosa

Almost no diversification

The 3 months correlation between Virtus and Arcosa is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa Inc and Virtus Investment 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 Investment Partners are associated (or correlated) with Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of Virtus Investment i.e., Virtus Investment and Arcosa go up and down completely randomly.

Pair Corralation between Virtus Investment and Arcosa

Assuming the 90 days horizon Virtus Investment Partners is expected to under-perform the Arcosa. In addition to that, Virtus Investment is 1.11 times more volatile than Arcosa Inc. It trades about -0.39 of its total potential returns per unit of risk. Arcosa Inc is currently generating about -0.3 per unit of volatility. If you would invest  10,300  in Arcosa Inc on September 28, 2024 and sell it today you would lose (800.00) from holding Arcosa Inc or give up 7.77% of portfolio value over 90 days.

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

Virtus Investment Partners  vs.  Arcosa Inc

Virtus Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Arcosa Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arcosa Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arcosa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Investment and Arcosa

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

The idea behind Virtus Investment Partners and Arcosa Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.