Correlation Between Global X and Virtus Reaves

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

By analyzing existing cross correlation between Global X YieldCo and Virtus Reaves Utilities, you can compare the effects of market volatilities on Global X and Virtus Reaves 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 Global X with a short position of Virtus Reaves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Virtus Reaves.

Diversification Opportunities for Global X and Virtus Reaves

-0.72

Correlation Coefficient

Global X  Virtus Reaves

Pay attention - limited upside

The 3 months correlation between Global and Virtus is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Global X YieldCo and Virtus Reaves Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Reaves Utilities and Global X 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 Global X YieldCo are associated (or correlated) with Virtus Reaves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Reaves Utilities has no effect on the direction of Global X i.e., Global X and Virtus Reaves go up and down completely randomly.

Pair Corralation between Global X and Virtus Reaves

Given the investment horizon of 90 days Global X YieldCo is expected to under-perform the Virtus Reaves. But the etf apears to be less risky and, when comparing its historical volatility, Global X YieldCo is 1.12 times less risky than Virtus Reaves. The etf trades about -0.11 of its potential returns per unit of risk. The Virtus Reaves Utilities is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  5,575  in Virtus Reaves Utilities on September 2, 2024 and sell it today you would earn a total of  1,408  from holding Virtus Reaves Utilities or generate 25.26% return on investment over 90 days.

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

Global X YieldCo  vs.  Virtus Reaves Utilities

Global X YieldCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X YieldCo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Virtus Reaves Utilities

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Reaves Utilities are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Virtus Reaves unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Virtus Reaves

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

The idea behind Global X YieldCo and Virtus Reaves Utilities 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.