Correlation Between IShares Core and VictoryShares International

Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core MSCI and VictoryShares International Volatility, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of VictoryShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and VictoryShares International.

Diversification Opportunities for IShares Core and VictoryShares International

0.95

Correlation Coefficient

IShares Core  VictoryShares International

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 Core MSCI and VictoryShares International Vo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares International and IShares Core 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 Core MSCI 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 Core i.e., IShares Core and VictoryShares International go up and down completely randomly.

Pair Corralation between IShares Core and VictoryShares International

Given the investment horizon of 90 days iShares Core MSCI is expected to generate 1.1 times more return on investment than VictoryShares International. However, IShares Core is 1.1 times more volatile than VictoryShares International Volatility. It trades about -0.01 of its potential returns per unit of risk. VictoryShares International Volatility is currently generating about -0.02 per unit of risk. If you would invest  6,960  in iShares Core MSCI on September 2, 2024 and sell it today you would lose (46.00) from holding iShares Core MSCI or give up 0.66% of portfolio value over 90 days.

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

iShares Core MSCI  vs.  VictoryShares International Vo

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VictoryShares International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VictoryShares International Volatility has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, VictoryShares International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares Core and VictoryShares International

The main advantage of trading using opposite IShares Core and VictoryShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core MSCI and VictoryShares International Volatility 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.