Correlation Between Virtus InfraCap and Netlist

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

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

Diversification Opportunities for Virtus InfraCap and Netlist

-0.55

Correlation Coefficient

Virtus InfraCap  Netlist

Excellent diversification

The 3 months correlation between Virtus and Netlist is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Virtus InfraCap Preferred and Netlist in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netlist and Virtus InfraCap 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 InfraCap Preferred are associated (or correlated) with Netlist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netlist has no effect on the direction of Virtus InfraCap i.e., Virtus InfraCap and Netlist go up and down completely randomly.

Pair Corralation between Virtus InfraCap and Netlist

Given the investment horizon of 90 days Virtus InfraCap Preferred is expected to generate 0.09 times more return on investment than Netlist. However, Virtus InfraCap Preferred is 10.57 times less risky than Netlist. It trades about 0.08 of its potential returns per unit of risk. Netlist is currently generating about -0.03 per unit of risk. If you would invest  1,832  in Virtus InfraCap Preferred on January 24, 2024 and sell it today you would earn a total of  203.00  from holding Virtus InfraCap Preferred or generate 11.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	58.38%
Values	Daily Returns

Virtus InfraCap Preferred  vs.  Netlist

Virtus InfraCap Preferred

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus InfraCap Preferred are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Virtus InfraCap is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Netlist

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netlist has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Netlist is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Virtus InfraCap and Netlist

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

The idea behind Virtus InfraCap Preferred and Netlist 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.