Correlation Between IShares Global and VictoryShares THB

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

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

Diversification Opportunities for IShares Global and VictoryShares THB

0.7

Correlation Coefficient

IShares Global  VictoryShares THB

Poor diversification

The 3 months correlation between IShares and VictoryShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Tech and VictoryShares THB Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares THB Mid and IShares Global 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 Global Tech are associated (or correlated) with VictoryShares THB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares THB Mid has no effect on the direction of IShares Global i.e., IShares Global and VictoryShares THB go up and down completely randomly.

Pair Corralation between IShares Global and VictoryShares THB

Considering the 90-day investment horizon iShares Global Tech is expected to generate 1.28 times more return on investment than VictoryShares THB. However, IShares Global is 1.28 times more volatile than VictoryShares THB Mid. It trades about 0.11 of its potential returns per unit of risk. VictoryShares THB Mid is currently generating about 0.08 per unit of risk. If you would invest  8,071  in iShares Global Tech on September 13, 2024 and sell it today you would earn a total of  570.00  from holding iShares Global Tech or generate 7.06% return on investment over 90 days.

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

iShares Global Tech  vs.  VictoryShares THB Mid

iShares Global Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Tech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VictoryShares THB Mid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares THB Mid are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, VictoryShares THB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Global and VictoryShares THB

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

The idea behind iShares Global Tech and VictoryShares THB Mid 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.