Correlation Between VIIX and IShares Interest

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

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

Diversification Opportunities for VIIX and IShares Interest

-0.88

Correlation Coefficient

VIIX  IShares Interest

Pay attention - limited upside

The 3 months correlation between VIIX and IShares is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest 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 Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of VIIX i.e., VIIX and IShares Interest go up and down completely randomly.

Pair Corralation between VIIX and IShares Interest

If you would invest  2,351  in iShares Interest Rate on September 2, 2024 and sell it today you would earn a total of  98.00  from holding iShares Interest Rate or generate 4.17% 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 Interest 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 Interest Rate

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Interest Rate are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, IShares Interest is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with VIIX and IShares Interest

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

The idea behind VIIX and iShares Interest 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.