Correlation Between Virtus ETF and IShares MSCI

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

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

Diversification Opportunities for Virtus ETF and IShares MSCI

0.95

Correlation Coefficient

Virtus ETF  IShares MSCI

Almost no diversification

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

Pair Corralation between Virtus ETF and IShares MSCI

Given the investment horizon of 90 days Virtus ETF Trust is expected to generate 1.13 times more return on investment than IShares MSCI. However, Virtus ETF is 1.13 times more volatile than iShares MSCI USA. It trades about 0.22 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.13 per unit of risk. If you would invest  3,542  in Virtus ETF Trust on September 12, 2024 and sell it today you would earn a total of  440.00  from holding Virtus ETF Trust or generate 12.42% return on investment over 90 days.

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

Virtus ETF Trust  vs.  iShares MSCI USA

Virtus ETF Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Virtus ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares MSCI USA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Virtus ETF and IShares MSCI

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

The idea behind Virtus ETF Trust and iShares MSCI USA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.