Correlation Between Walden Asset and Virtus Kar

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

By analyzing existing cross correlation between Walden Asset Management and Virtus Kar Small Cap, you can compare the effects of market volatilities on Walden Asset and Virtus Kar 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 Walden Asset with a short position of Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walden Asset and Virtus Kar.

Diversification Opportunities for Walden Asset and Virtus Kar

0.47

Correlation Coefficient

Walden Asset  Virtus Kar

Very weak diversification

The 3 months correlation between Walden and Virtus is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Walden Asset Management and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small and Walden Asset 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 Walden Asset Management are associated (or correlated) with Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Walden Asset i.e., Walden Asset and Virtus Kar go up and down completely randomly.

Pair Corralation between Walden Asset and Virtus Kar

Assuming the 90 days horizon Walden Asset Management is expected to under-perform the Virtus Kar. But the mutual fund apears to be less risky and, when comparing its historical volatility, Walden Asset Management is 1.33 times less risky than Virtus Kar. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Virtus Kar Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,999  in Virtus Kar Small Cap on September 20, 2024 and sell it today you would earn a total of  143.00  from holding Virtus Kar Small Cap or generate 3.58% return on investment over 90 days.

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

Walden Asset Management  vs.  Virtus Kar Small Cap

Walden Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walden Asset Management has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Walden Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Kar Small

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Kar Small Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Kar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walden Asset and Virtus Kar

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

The idea behind Walden Asset Management and Virtus Kar Small Cap 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.