Correlation Between IShares Select and VictoryShares Dividend

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

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

Diversification Opportunities for IShares Select and VictoryShares Dividend

0.95

Correlation Coefficient

IShares Select  VictoryShares Dividend

Almost no diversification

The 3 months correlation between IShares and VictoryShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Select Dividend and VictoryShares Dividend Acceler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Dividend and IShares Select 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 Select Dividend are associated (or correlated) with VictoryShares Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Dividend has no effect on the direction of IShares Select i.e., IShares Select and VictoryShares Dividend go up and down completely randomly.

Pair Corralation between IShares Select and VictoryShares Dividend

Considering the 90-day investment horizon iShares Select Dividend is expected to generate 1.16 times more return on investment than VictoryShares Dividend. However, IShares Select is 1.16 times more volatile than VictoryShares Dividend Accelerator. It trades about 0.19 of its potential returns per unit of risk. VictoryShares Dividend Accelerator is currently generating about 0.16 per unit of risk. If you would invest  13,197  in iShares Select Dividend on September 2, 2024 and sell it today you would earn a total of  1,144  from holding iShares Select Dividend or generate 8.67% return on investment over 90 days.

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

iShares Select Dividend  vs.  VictoryShares Dividend Acceler

iShares Select Dividend

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Select Dividend are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IShares Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VictoryShares Dividend

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares Dividend Accelerator are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, VictoryShares Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Select and VictoryShares Dividend

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

The idea behind iShares Select Dividend and VictoryShares Dividend Accelerator 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.