Correlation Between Virtus LifeSci and Health Care
Can any of the company-specific risk be diversified away by investing in both Virtus LifeSci and Health Care 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 Health Care 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 Health Care Select, you can compare the effects of market volatilities on Virtus LifeSci and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus LifeSci and Health Care.
Diversification Opportunities for Virtus LifeSci and Health Care
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and Health is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Virtus LifeSci Biotech and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Virtus LifeSci i.e., Virtus LifeSci and Health Care go up and down completely randomly.
Pair Corralation between Virtus LifeSci and Health Care
Considering the 90-day investment horizon Virtus LifeSci Biotech is expected to under-perform the Health Care. In addition to that, Virtus LifeSci is 2.33 times more volatile than Health Care Select. It trades about -0.37 of its total potential returns per unit of risk. Health Care Select is currently generating about -0.31 per unit of volatility. If you would invest 14,545 in Health Care Select on January 20, 2024 and sell it today you would lose (702.00) from holding Health Care Select or give up 4.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus LifeSci Biotech vs. Health Care Select
Performance |
| Timeline |
| Virtus LifeSci Biotech |
| Health Care Select |
Virtus LifeSci and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus LifeSci and Health Care
The main advantage of trading using opposite Virtus LifeSci and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus LifeSci position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care'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 |
| Health Care vs. Consumer Staples Select | Health Care vs. Industrial Select Sector | Health Care vs. Consumer Discretionary Select | Health Care vs. Utilities Select Sector |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |