Correlation Between IShares International and VictoryShares International

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

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

Diversification Opportunities for IShares International and VictoryShares International

0.97

Correlation Coefficient

IShares International  VictoryShares International

Almost no diversification

The 3 months correlation between IShares and VictoryShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Select and VictoryShares International Va in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares International and IShares International 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 International Select are associated (or correlated) with VictoryShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares International has no effect on the direction of IShares International i.e., IShares International and VictoryShares International go up and down completely randomly.

Pair Corralation between IShares International and VictoryShares International

Considering the 90-day investment horizon iShares International Select is expected to generate 1.02 times more return on investment than VictoryShares International. However, IShares International is 1.02 times more volatile than VictoryShares International Value. It trades about -0.02 of its potential returns per unit of risk. VictoryShares International Value is currently generating about -0.03 per unit of risk. If you would invest  2,906  in iShares International Select on September 3, 2024 and sell it today you would lose (34.00) from holding iShares International Select or give up 1.17% of portfolio value over 90 days.

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

iShares International Select  vs.  VictoryShares International Va

iShares International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares International Select has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, IShares International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

VictoryShares International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares International and VictoryShares International

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

The idea behind iShares International Select and VictoryShares International Value 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.