Correlation Between Strategy Shares and IVSG

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

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

Diversification Opportunities for Strategy Shares and IVSG

-0.25

Correlation Coefficient

Strategy Shares  IVSG

Very good diversification

The 3 months correlation between Strategy and IVSG is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares and IVSG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IVSG and Strategy Shares 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 Strategy Shares are associated (or correlated) with IVSG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IVSG has no effect on the direction of Strategy Shares i.e., Strategy Shares and IVSG go up and down completely randomly.

Pair Corralation between Strategy Shares and IVSG

If you would invest  1,017  in IVSG on January 25, 2024 and sell it today you would earn a total of  0.00  from holding IVSG or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Strategy Shares  vs.  IVSG

Strategy Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategy Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

IVSG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IVSG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IVSG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Strategy Shares and IVSG

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

The idea behind Strategy Shares and IVSG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.