Correlation Between IShares Preferred and Virtus InfraCap

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

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

Diversification Opportunities for IShares Preferred and Virtus InfraCap

0.87

Correlation Coefficient

IShares Preferred  Virtus InfraCap

Very poor diversification

The 3 months correlation between IShares and Virtus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Preferred and and Virtus InfraCap Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus InfraCap Preferred and IShares Preferred 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 Preferred and are associated (or correlated) with Virtus InfraCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus InfraCap Preferred has no effect on the direction of IShares Preferred i.e., IShares Preferred and Virtus InfraCap go up and down completely randomly.

Pair Corralation between IShares Preferred and Virtus InfraCap

Considering the 90-day investment horizon iShares Preferred and is expected to under-perform the Virtus InfraCap. In addition to that, IShares Preferred is 1.0 times more volatile than Virtus InfraCap Preferred. It trades about -0.06 of its total potential returns per unit of risk. Virtus InfraCap Preferred is currently generating about -0.02 per unit of volatility. If you would invest  2,081  in Virtus InfraCap Preferred on February 4, 2024 and sell it today you would lose (7.00) from holding Virtus InfraCap Preferred or give up 0.34% of portfolio value over 90 days.

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

iShares Preferred and  vs.  Virtus InfraCap Preferred

iShares Preferred

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Preferred and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, IShares Preferred is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Virtus InfraCap Preferred

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus InfraCap Preferred are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Virtus InfraCap is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Preferred and Virtus InfraCap

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

The idea behind iShares Preferred and and Virtus InfraCap Preferred 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.