Correlation Between Virtus Dfa and Harmony Gold

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

By analyzing existing cross correlation between Virtus Dfa 2040 and Harmony Gold Mining, you can compare the effects of market volatilities on Virtus Dfa and Harmony Gold 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 Dfa with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and Harmony Gold.

Diversification Opportunities for Virtus Dfa and Harmony Gold

0.05

Correlation Coefficient

Virtus Dfa  Harmony Gold

Significant diversification

The 3 months correlation between Virtus and Harmony is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and Virtus Dfa 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 Dfa 2040 are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Virtus Dfa i.e., Virtus Dfa and Harmony Gold go up and down completely randomly.

Pair Corralation between Virtus Dfa and Harmony Gold

Assuming the 90 days horizon Virtus Dfa 2040 is expected to generate 0.13 times more return on investment than Harmony Gold. However, Virtus Dfa 2040 is 7.57 times less risky than Harmony Gold. It trades about 0.2 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.01 per unit of risk. If you would invest  1,157  in Virtus Dfa 2040 on September 4, 2024 and sell it today you would earn a total of  68.00  from holding Virtus Dfa 2040 or generate 5.88% return on investment over 90 days.

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

Virtus Dfa 2040  vs.  Harmony Gold Mining

Virtus Dfa 2040

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Dfa 2040 are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Dfa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harmony Gold Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Harmony Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Dfa and Harmony Gold

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

The idea behind Virtus Dfa 2040 and Harmony Gold Mining 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.