Correlation Between Virtus Reaves and First Trust

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

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

Diversification Opportunities for Virtus Reaves and First Trust

0.64

Correlation Coefficient

Virtus Reaves  First Trust

Poor diversification

The 3 months correlation between Virtus and First is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Reaves Utilities and First Trust EIP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust EIP and Virtus Reaves 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 Reaves Utilities are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust EIP has no effect on the direction of Virtus Reaves i.e., Virtus Reaves and First Trust go up and down completely randomly.

Pair Corralation between Virtus Reaves and First Trust

Given the investment horizon of 90 days Virtus Reaves Utilities is expected to generate 1.78 times more return on investment than First Trust. However, Virtus Reaves is 1.78 times more volatile than First Trust EIP. It trades about 0.18 of its potential returns per unit of risk. First Trust EIP is currently generating about 0.15 per unit of risk. If you would invest  7,199  in Virtus Reaves Utilities on May 16, 2025 and sell it today you would earn a total of  978.00  from holding Virtus Reaves Utilities or generate 13.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Virtus Reaves Utilities  vs.  First Trust EIP

Virtus Reaves Utilities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Reaves Utilities are ranked lower than 14 (%) 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.

First Trust EIP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust EIP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Virtus Reaves and First Trust

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

The idea behind Virtus Reaves Utilities and First Trust EIP 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.