Correlation Between Stone Harbor and Virtus Global

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

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

Diversification Opportunities for Stone Harbor and Virtus Global

-0.26

Correlation Coefficient

Stone Harbor  Virtus Global

Very good diversification

The 3 months correlation between Stone and Virtus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging and Virtus Global Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Global Multi and Stone Harbor 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 Stone Harbor Emerging are associated (or correlated) with Virtus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Global Multi has no effect on the direction of Stone Harbor i.e., Stone Harbor and Virtus Global go up and down completely randomly.

Pair Corralation between Stone Harbor and Virtus Global

Considering the 90-day investment horizon Stone Harbor Emerging is expected to generate 4.26 times more return on investment than Virtus Global. However, Stone Harbor is 4.26 times more volatile than Virtus Global Multi. It trades about 0.03 of its potential returns per unit of risk. Virtus Global Multi is currently generating about -0.11 per unit of risk. If you would invest  541.00  in Stone Harbor Emerging on February 3, 2024 and sell it today you would earn a total of  4.00  from holding Stone Harbor Emerging or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Stone Harbor Emerging  vs.  Virtus Global Multi

Stone Harbor Emerging

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Harbor Emerging are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly weak fundamental indicators, Stone Harbor reported solid returns over the last few months and may actually be approaching a breakup point.

Virtus Global Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Global Multi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Virtus Global is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Stone Harbor and Virtus Global

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

The idea behind Stone Harbor Emerging and Virtus Global Multi 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 Global Correlations module to find global opportunities by holding instruments from different markets.