Correlation Between Virtus Investment and Sovereign Metals

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

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

Diversification Opportunities for Virtus Investment and Sovereign Metals

0.24

Correlation Coefficient

Virtus Investment  Sovereign Metals

Modest diversification

The 3 months correlation between Virtus and Sovereign is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and Sovereign Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals and Virtus Investment 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 Investment Partners are associated (or correlated) with Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of Virtus Investment i.e., Virtus Investment and Sovereign Metals go up and down completely randomly.

Pair Corralation between Virtus Investment and Sovereign Metals

Assuming the 90 days horizon Virtus Investment Partners is expected to generate 0.66 times more return on investment than Sovereign Metals. However, Virtus Investment Partners is 1.52 times less risky than Sovereign Metals. It trades about 0.26 of its potential returns per unit of risk. Sovereign Metals Limited is currently generating about 0.06 per unit of risk. If you would invest  13,202  in Virtus Investment Partners on April 24, 2025 and sell it today you would earn a total of  4,398  from holding Virtus Investment Partners or generate 33.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Virtus Investment Partners  vs.  Sovereign Metals Limited

Virtus Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Sovereign Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sovereign Metals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sovereign Metals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Virtus Investment and Sovereign Metals

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

The idea behind Virtus Investment Partners and Sovereign Metals Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.