Correlation Between Virtus Multi and Invesco Energy

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

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

Diversification Opportunities for Virtus Multi and Invesco Energy

0.09

Correlation Coefficient

Virtus Multi  Invesco Energy

Significant diversification

The 3 months correlation between Virtus and Invesco is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Sector Short and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and Virtus Multi 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 Multi Sector Short are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of Virtus Multi i.e., Virtus Multi and Invesco Energy go up and down completely randomly.

Pair Corralation between Virtus Multi and Invesco Energy

Assuming the 90 days horizon Virtus Multi Sector Short is expected to generate 0.1 times more return on investment than Invesco Energy. However, Virtus Multi Sector Short is 10.33 times less risky than Invesco Energy. It trades about -0.03 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about -0.05 per unit of risk. If you would invest  455.00  in Virtus Multi Sector Short on September 26, 2024 and sell it today you would lose (1.00) from holding Virtus Multi Sector Short or give up 0.22% of portfolio value over 90 days.

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

Virtus Multi Sector Short  vs.  Invesco Energy Fund

Virtus Multi Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Multi Sector Short 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.

Invesco Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Energy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Invesco Energy 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 Multi and Invesco Energy

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

The idea behind Virtus Multi Sector Short and Invesco Energy 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.