Correlation Between IShares Fundamental and Oculus VisionTech

Can any of the company-specific risk be diversified away by investing in both IShares Fundamental and Oculus VisionTech 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 IShares Fundamental and Oculus VisionTech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Fundamental Hedged and Oculus VisionTech, you can compare the effects of market volatilities on IShares Fundamental and Oculus VisionTech 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 IShares Fundamental with a short position of Oculus VisionTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and Oculus VisionTech.

Diversification Opportunities for IShares Fundamental and Oculus VisionTech

0.24

Correlation Coefficient

IShares Fundamental  Oculus VisionTech

Modest diversification

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

Pair Corralation between IShares Fundamental and Oculus VisionTech

Assuming the 90 days trading horizon IShares Fundamental is expected to generate 4.63 times less return on investment than Oculus VisionTech. But when comparing it to its historical volatility, iShares Fundamental Hedged is 11.77 times less risky than Oculus VisionTech. It trades about 0.08 of its potential returns per unit of risk. Oculus VisionTech is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Oculus VisionTech on September 26, 2024 and sell it today you would lose (5.75) from holding Oculus VisionTech or give up 41.07% of portfolio value over 90 days.

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

iShares Fundamental Hedged  vs.  Oculus VisionTech

iShares Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Fundamental Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Fundamental is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Oculus VisionTech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oculus VisionTech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Oculus VisionTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Fundamental and Oculus VisionTech

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

The idea behind iShares Fundamental Hedged and Oculus VisionTech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.