Correlation Between VIIX and IShares Floating

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

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

Diversification Opportunities for VIIX and IShares Floating

-0.94

Correlation Coefficient

VIIX  IShares Floating

Pay attention - limited upside

The 3 months correlation between VIIX and IShares is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and iShares Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Floating Rate and VIIX 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 VIIX are associated (or correlated) with IShares Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Floating Rate has no effect on the direction of VIIX i.e., VIIX and IShares Floating go up and down completely randomly.

Pair Corralation between VIIX and IShares Floating

If you would invest  5,033  in iShares Floating Rate on September 2, 2024 and sell it today you would earn a total of  74.00  from holding iShares Floating Rate or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

VIIX  vs.  iShares Floating Rate

VIIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, VIIX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Floating Rate

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Floating Rate are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Floating is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VIIX and IShares Floating

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

The idea behind VIIX and iShares Floating Rate 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.