Correlation Between Virtus Newfleet and Build Funds

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Can any of the company-specific risk be diversified away by investing in both Virtus Newfleet and Build Funds 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 Newfleet and Build Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Newfleet ABSMBS and Build Funds Trust, you can compare the effects of market volatilities on Virtus Newfleet and Build Funds 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 Newfleet with a short position of Build Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Newfleet and Build Funds.

Diversification Opportunities for Virtus Newfleet and Build Funds

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Virtus and Build is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Newfleet ABSMBS and Build Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build Funds Trust and Virtus Newfleet 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 Newfleet ABSMBS are associated (or correlated) with Build Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build Funds Trust has no effect on the direction of Virtus Newfleet i.e., Virtus Newfleet and Build Funds go up and down completely randomly.

Pair Corralation between Virtus Newfleet and Build Funds

Given the investment horizon of 90 days Virtus Newfleet ABSMBS is expected to generate 0.44 times more return on investment than Build Funds. However, Virtus Newfleet ABSMBS is 2.25 times less risky than Build Funds. It trades about 0.1 of its potential returns per unit of risk. Build Funds Trust is currently generating about -0.04 per unit of risk. If you would invest  2,374  in Virtus Newfleet ABSMBS on November 24, 2023 and sell it today you would earn a total of  7.00  from holding Virtus Newfleet ABSMBS or generate 0.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Virtus Newfleet ABSMBS  vs.  Build Funds Trust

 Performance 
       Timeline  
Virtus Newfleet ABSMBS 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Newfleet ABSMBS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Virtus Newfleet is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Build Funds Trust 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Build Funds Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Build Funds is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Virtus Newfleet and Build Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Virtus Newfleet and Build Funds

The main advantage of trading using opposite Virtus Newfleet and Build Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Newfleet position performs unexpectedly, Build Funds 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 Build Funds will offset losses from the drop in Build Funds' long position.
The idea behind Virtus Newfleet ABSMBS and Build Funds Trust 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 Stocks Directory module to find actively traded stocks across global markets.

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