Correlation Between Virtus Newfleet and Knowledge Leaders

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

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

Diversification Opportunities for Virtus Newfleet and Knowledge Leaders

0.45

Correlation Coefficient

Virtus Newfleet  Knowledge Leaders

Very weak diversification

The 3 months correlation between Virtus and Knowledge is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Newfleet ABSMBS and Knowledge Leaders Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowledge Leaders and Virtus Newfleet 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 Newfleet ABSMBS are associated (or correlated) with Knowledge Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowledge Leaders has no effect on the direction of Virtus Newfleet i.e., Virtus Newfleet and Knowledge Leaders go up and down completely randomly.

Pair Corralation between Virtus Newfleet and Knowledge Leaders

Given the investment horizon of 90 days Virtus Newfleet is expected to generate 4.14 times less return on investment than Knowledge Leaders. But when comparing it to its historical volatility, Virtus Newfleet ABSMBS is 3.44 times less risky than Knowledge Leaders. It trades about 0.18 of its potential returns per unit of risk. Knowledge Leaders Developed is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,623  in Knowledge Leaders Developed on May 2, 2025 and sell it today you would earn a total of  327.00  from holding Knowledge Leaders Developed or generate 7.07% return on investment over 90 days.

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

Virtus Newfleet ABSMBS  vs.  Knowledge Leaders Developed

Virtus Newfleet ABSMBS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Newfleet ABSMBS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Virtus Newfleet is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Knowledge Leaders

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Knowledge Leaders Developed are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Knowledge Leaders may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Virtus Newfleet and Knowledge Leaders

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

The idea behind Virtus Newfleet ABSMBS and Knowledge Leaders Developed 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.