Correlation Between Virtus LifeSci and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Virtus LifeSci and SPDR SP 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 SPDR SP 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 SPDR SP Biotech, you can compare the effects of market volatilities on Virtus LifeSci and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus LifeSci and SPDR SP.
Diversification Opportunities for Virtus LifeSci and SPDR SP
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virtus and SPDR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Virtus LifeSci Biotech and SPDR SP Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Biotech 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Biotech has no effect on the direction of Virtus LifeSci i.e., Virtus LifeSci and SPDR SP go up and down completely randomly.
Pair Corralation between Virtus LifeSci and SPDR SP
Considering the 90-day investment horizon Virtus LifeSci Biotech is expected to generate 0.85 times more return on investment than SPDR SP. However, Virtus LifeSci Biotech is 1.18 times less risky than SPDR SP. It trades about -0.2 of its potential returns per unit of risk. SPDR SP Biotech is currently generating about -0.25 per unit of risk. If you would invest 5,582 in Virtus LifeSci Biotech on January 25, 2024 and sell it today you would lose (319.00) from holding Virtus LifeSci Biotech or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Virtus LifeSci Biotech vs. SPDR SP Biotech
Performance |
| Timeline |
| Virtus LifeSci Biotech |
| SPDR SP Biotech |
Virtus LifeSci and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus LifeSci and SPDR SP
The main advantage of trading using opposite Virtus LifeSci and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus LifeSci position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Virtus LifeSci vs. iShares Insurance ETF | Virtus LifeSci vs. SCOR PK | Virtus LifeSci vs. Morningstar Unconstrained Allocation | Virtus LifeSci vs. SPACE |
| SPDR SP vs. iShares Insurance ETF | SPDR SP vs. SCOR PK | SPDR SP vs. Morningstar Unconstrained Allocation | SPDR SP vs. SPACE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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