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

0.99

Correlation Coefficient

IShares Core  VictoryShares International

No risk reduction

The 3 months correlation between IShares and VictoryShares is 0.99. 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 1.0 times more return on investment than VictoryShares International. However, iShares Core MSCI is 1.0 times less risky than VictoryShares International. It trades about 0.05 of its potential returns per unit of risk. VictoryShares International Volatility is currently generating about 0.03 per unit of risk. If you would invest  7,381  in iShares Core MSCI on March 12, 2024 and sell it today you would earn a total of  152.00  from holding iShares Core MSCI or generate 2.06% return on investment 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VictoryShares International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares International Volatility are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .