Correlation Between Saba Closed and Virtus Terranova

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

By analyzing existing cross correlation between Saba Closed End Funds and Virtus Terranova Quality, you can compare the effects of market volatilities on Saba Closed and Virtus Terranova 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 Saba Closed with a short position of Virtus Terranova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saba Closed and Virtus Terranova.

Diversification Opportunities for Saba Closed and Virtus Terranova

0.5

Correlation Coefficient

Saba Closed  Virtus Terranova

Very weak diversification

The 3 months correlation between Saba and Virtus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Saba Closed End Funds and Virtus Terranova Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Terranova Quality and Saba Closed 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 Saba Closed End Funds are associated (or correlated) with Virtus Terranova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Terranova Quality has no effect on the direction of Saba Closed i.e., Saba Closed and Virtus Terranova go up and down completely randomly.

Pair Corralation between Saba Closed and Virtus Terranova

Given the investment horizon of 90 days Saba Closed End Funds is expected to generate 0.85 times more return on investment than Virtus Terranova. However, Saba Closed End Funds is 1.17 times less risky than Virtus Terranova. It trades about 0.18 of its potential returns per unit of risk. Virtus Terranova Quality is currently generating about 0.0 per unit of risk. If you would invest  1,957  in Saba Closed End Funds on March 14, 2024 and sell it today you would earn a total of  144.00  from holding Saba Closed End Funds or generate 7.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Saba Closed End Funds  vs.  Virtus Terranova Quality

Saba Closed End

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saba Closed End Funds are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Saba Closed may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Virtus Terranova Quality

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Saba Closed and Virtus Terranova

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

The idea behind Saba Closed End Funds and Virtus Terranova Quality 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.