Correlation Between IShares Core and WisdomTree Voya

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

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

Diversification Opportunities for IShares Core and WisdomTree Voya

0.58

Correlation Coefficient

IShares Core  WisdomTree Voya

Very weak diversification

The 3 months correlation between IShares and WisdomTree is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Aggregate and WisdomTree Voya Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Voya Yield 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 Aggregate are associated (or correlated) with WisdomTree Voya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Voya Yield has no effect on the direction of IShares Core i.e., IShares Core and WisdomTree Voya go up and down completely randomly.

Pair Corralation between IShares Core and WisdomTree Voya

Considering the 90-day investment horizon IShares Core is expected to generate 1.4 times less return on investment than WisdomTree Voya. In addition to that, IShares Core is 1.24 times more volatile than WisdomTree Voya Yield. It trades about 0.02 of its total potential returns per unit of risk. WisdomTree Voya Yield is currently generating about 0.04 per unit of volatility. If you would invest  4,538  in WisdomTree Voya Yield on October 7, 2024 and sell it today you would earn a total of  261.00  from holding WisdomTree Voya Yield or generate 5.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.98%
Values	Daily Returns

iShares Core Aggregate  vs.  WisdomTree Voya Yield

iShares Core Aggregate

Risk-Adjusted Performance

0 of 100

Very Weak

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

WisdomTree Voya Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Voya Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, WisdomTree Voya is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and WisdomTree Voya

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

The idea behind iShares Core Aggregate and WisdomTree Voya Yield 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.