Correlation Between Virtus LifeSci and Vanguard Health
Can any of the company-specific risk be diversified away by investing in both Virtus LifeSci and Vanguard Health 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 LifeSci and Vanguard Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus LifeSci Biotech and Vanguard Health Care, you can compare the effects of market volatilities on Virtus LifeSci and Vanguard Health 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 LifeSci with a short position of Vanguard Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus LifeSci and Vanguard Health.
Diversification Opportunities for Virtus LifeSci and Vanguard Health
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and Vanguard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Virtus LifeSci Biotech and Vanguard Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Health Care and Virtus LifeSci 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 LifeSci Biotech are associated (or correlated) with Vanguard Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Health Care has no effect on the direction of Virtus LifeSci i.e., Virtus LifeSci and Vanguard Health go up and down completely randomly.
Pair Corralation between Virtus LifeSci and Vanguard Health
Considering the 90-day investment horizon Virtus LifeSci Biotech is expected to under-perform the Vanguard Health. In addition to that, Virtus LifeSci is 2.46 times more volatile than Vanguard Health Care. It trades about -0.3 of its total potential returns per unit of risk. Vanguard Health Care is currently generating about -0.34 per unit of volatility. If you would invest 26,757 in Vanguard Health Care on January 19, 2024 and sell it today you would lose (1,474) from holding Vanguard Health Care or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Virtus LifeSci Biotech vs. Vanguard Health Care
Performance |
| Timeline |
| Virtus LifeSci Biotech |
| Vanguard Health Care |
Virtus LifeSci and Vanguard Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus LifeSci and Vanguard Health
The main advantage of trading using opposite Virtus LifeSci and Vanguard Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus LifeSci position performs unexpectedly, Vanguard Health 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 Vanguard Health will offset losses from the drop in Vanguard Health's long position.| Virtus LifeSci vs. Virtus LifeSci Biotech | Virtus LifeSci vs. ALPS Medical Breakthroughs | Virtus LifeSci vs. Loncar Cancer Immunotherapy | Virtus LifeSci vs. First Trust NYSE |
| Vanguard Health vs. Vanguard Consumer Staples | Vanguard Health vs. Vanguard Financials Index | Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Consumer Discretionary |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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