Correlation Between IShares Core and VictoryShares Multi

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

By analyzing existing cross correlation between iShares Core Dividend and VictoryShares Multi Factor Minimum, you can compare the effects of market volatilities on IShares Core and VictoryShares Multi 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 Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and VictoryShares Multi.

Diversification Opportunities for IShares Core and VictoryShares Multi

0.88

Correlation Coefficient

IShares Core  VictoryShares Multi

Very poor diversification

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

Pair Corralation between IShares Core and VictoryShares Multi

Given the investment horizon of 90 days iShares Core Dividend is expected to under-perform the VictoryShares Multi. In addition to that, IShares Core is 1.05 times more volatile than VictoryShares Multi Factor Minimum. It trades about -0.05 of its total potential returns per unit of risk. VictoryShares Multi Factor Minimum is currently generating about 0.08 per unit of volatility. If you would invest  4,437  in VictoryShares Multi Factor Minimum on March 11, 2024 and sell it today you would earn a total of  42.00  from holding VictoryShares Multi Factor Minimum or generate 0.95% return on investment over 90 days.

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

iShares Core Dividend  vs.  VictoryShares Multi Factor Min

iShares Core Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Dividend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

VictoryShares Multi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares Multi Factor Minimum are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, VictoryShares Multi is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Core and VictoryShares Multi

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

The idea behind iShares Core Dividend and VictoryShares Multi Factor Minimum 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.