Correlation Between Heitman Real and Virtus Real

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

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

Diversification Opportunities for Heitman Real and Virtus Real

0.97

Correlation Coefficient

Heitman Real  Virtus Real

Almost no diversification

The 3 months correlation between Heitman and Virtus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Heitman Real Estate and Virtus Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Real Estate and Heitman Real 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 Heitman Real Estate are associated (or correlated) with Virtus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Real Estate has no effect on the direction of Heitman Real i.e., Heitman Real and Virtus Real go up and down completely randomly.

Pair Corralation between Heitman Real and Virtus Real

Assuming the 90 days horizon Heitman Real is expected to generate 1.03 times less return on investment than Virtus Real. But when comparing it to its historical volatility, Heitman Real Estate is 1.59 times less risky than Virtus Real. It trades about 0.11 of its potential returns per unit of risk. Virtus Real Estate is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,096  in Virtus Real Estate on August 14, 2024 and sell it today you would earn a total of  31.00  from holding Virtus Real Estate or generate 1.48% return on investment over 90 days.

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

Heitman Real Estate  vs.  Virtus Real Estate

Heitman Real Estate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heitman Real Estate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Heitman Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Real Estate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Real Estate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Virtus Real may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Heitman Real and Virtus Real

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

The idea behind Heitman Real Estate and Virtus Real Estate 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 Anywhere module to track or share privately all of your investments from the convenience of any device.