Correlation Between Virtus LifeSci and Financial Select
Can any of the company-specific risk be diversified away by investing in both Virtus LifeSci and Financial Select 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 LifeSci and Financial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus LifeSci Biotech and Financial Select Sector, you can compare the effects of market volatilities on Virtus LifeSci and Financial Select 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 LifeSci with a short position of Financial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus LifeSci and Financial Select.
Diversification Opportunities for Virtus LifeSci and Financial Select
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and Financial is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virtus LifeSci Biotech and Financial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Select Sector and Virtus LifeSci 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 LifeSci Biotech are associated (or correlated) with Financial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Select Sector has no effect on the direction of Virtus LifeSci i.e., Virtus LifeSci and Financial Select go up and down completely randomly.
Pair Corralation between Virtus LifeSci and Financial Select
Considering the 90-day investment horizon Virtus LifeSci Biotech is expected to under-perform the Financial Select. In addition to that, Virtus LifeSci is 2.3 times more volatile than Financial Select Sector. It trades about -0.37 of its total potential returns per unit of risk. Financial Select Sector is currently generating about -0.25 per unit of volatility. If you would invest 4,156 in Financial Select Sector on January 20, 2024 and sell it today you would lose (173.00) from holding Financial Select Sector or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Virtus LifeSci Biotech vs. Financial Select Sector
Performance |
| Timeline |
| Virtus LifeSci Biotech |
| Financial Select Sector |
Virtus LifeSci and Financial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus LifeSci and Financial Select
The main advantage of trading using opposite Virtus LifeSci and Financial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus LifeSci position performs unexpectedly, Financial Select 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 Financial Select will offset losses from the drop in Financial Select's long position.| Virtus LifeSci vs. Virtus LifeSci Biotech | Virtus LifeSci vs. ALPS Medical Breakthroughs | Virtus LifeSci vs. Loncar Cancer Immunotherapy | Virtus LifeSci vs. First Trust NYSE |
| Financial Select vs. Energy Select Sector | Financial Select vs. Technology Select Sector | Financial Select vs. Health Care Select | Financial Select vs. Industrial Select Sector |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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