Correlation Between Virtus WMC and OBP Capital

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

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

Diversification Opportunities for Virtus WMC and OBP Capital

0.23

Correlation Coefficient

Virtus WMC  OBP Capital

Modest diversification

The 3 months correlation between Virtus and OBP is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Virtus WMC International and OBP Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBP Capital and Virtus WMC 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 WMC International are associated (or correlated) with OBP Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBP Capital has no effect on the direction of Virtus WMC i.e., Virtus WMC and OBP Capital go up and down completely randomly.

Pair Corralation between Virtus WMC and OBP Capital

Given the investment horizon of 90 days Virtus WMC International is expected to generate 1.39 times more return on investment than OBP Capital. However, Virtus WMC is 1.39 times more volatile than OBP Capital. It trades about 0.05 of its potential returns per unit of risk. OBP Capital is currently generating about 0.01 per unit of risk. If you would invest  2,223  in Virtus WMC International on September 20, 2024 and sell it today you would earn a total of  423.00  from holding Virtus WMC International or generate 19.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	25.0%
Values	Daily Returns

Virtus WMC International  vs.  OBP Capital

Virtus WMC International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus WMC International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

OBP Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OBP Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, OBP Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Virtus WMC and OBP Capital

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

The idea behind Virtus WMC International and OBP Capital 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.