Correlation Between Virtus Global and Pioneer High

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

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

Diversification Opportunities for Virtus Global and Pioneer High

0.85

Correlation Coefficient

Virtus Global  Pioneer High

Very poor diversification

The 3 months correlation between Virtus and Pioneer is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Global Multi and Pioneer High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer High Income and Virtus Global 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 Global Multi are associated (or correlated) with Pioneer High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer High Income has no effect on the direction of Virtus Global i.e., Virtus Global and Pioneer High go up and down completely randomly.

Pair Corralation between Virtus Global and Pioneer High

Considering the 90-day investment horizon Virtus Global is expected to generate 1.28 times less return on investment than Pioneer High. But when comparing it to its historical volatility, Virtus Global Multi is 1.03 times less risky than Pioneer High. It trades about 0.1 of its potential returns per unit of risk. Pioneer High Income is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  585.00  in Pioneer High Income on August 17, 2024 and sell it today you would earn a total of  196.00  from holding Pioneer High Income or generate 33.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.75%
Values	Daily Returns

Virtus Global Multi  vs.  Pioneer High Income

Virtus Global Multi

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Global Multi are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Virtus Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pioneer High Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer High Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Pioneer High is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Virtus Global and Pioneer High

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

The idea behind Virtus Global Multi and Pioneer High Income 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.