Correlation Between Virtus Ceredex and Virtus Multi

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

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

Diversification Opportunities for Virtus Ceredex and Virtus Multi

0.67

Correlation Coefficient

Virtus Ceredex  Virtus Multi

Poor diversification

The 3 months correlation between Virtus and Virtus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Ceredex Small Cap and Virtus Multi Strategy Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Multi Strategy and Virtus Ceredex 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 Ceredex Small Cap are associated (or correlated) with Virtus Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Multi Strategy has no effect on the direction of Virtus Ceredex i.e., Virtus Ceredex and Virtus Multi go up and down completely randomly.

Pair Corralation between Virtus Ceredex and Virtus Multi

Assuming the 90 days horizon Virtus Ceredex Small Cap is expected to under-perform the Virtus Multi. In addition to that, Virtus Ceredex is 3.34 times more volatile than Virtus Multi Strategy Target. It trades about -0.13 of its total potential returns per unit of risk. Virtus Multi Strategy Target is currently generating about -0.24 per unit of volatility. If you would invest  1,787  in Virtus Multi Strategy Target on January 28, 2024 and sell it today you would lose (24.00) from holding Virtus Multi Strategy Target or give up 1.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Virtus Ceredex Small Cap  vs.  Virtus Multi Strategy Target

Virtus Ceredex Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Ceredex Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Ceredex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Multi Strategy Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Virtus Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Ceredex and Virtus Multi

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

The idea behind Virtus Ceredex Small Cap and Virtus Multi Strategy Target 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.