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

0.48

Correlation Coefficient

Virtus LifeSci  Vanguard Health

Very weak diversification

The 3 months correlation between Virtus and Vanguard is 0.48. 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 2.15 times more volatile than Vanguard Health Care. It trades about -0.1 of its total potential returns per unit of risk. Vanguard Health Care is currently generating about 0.03 per unit of volatility. If you would invest  25,422  in Vanguard Health Care on January 26, 2024 and sell it today you would earn a total of  304.00  from holding Vanguard Health Care or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Virtus LifeSci Biotech  vs.  Vanguard Health Care

Virtus LifeSci Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus LifeSci Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Etf's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Vanguard Health Care

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Health Care are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Vanguard Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

The idea behind Virtus LifeSci Biotech and Vanguard Health Care 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.