Correlation Between Volatility Shares and IShares

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

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

Diversification Opportunities for Volatility Shares and IShares

0.0

Correlation Coefficient

Volatility Shares  IShares

Pay attention - limited upside

The 3 months correlation between Volatility and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and Volatility 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 Volatility Shares Trust are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Volatility Shares i.e., Volatility Shares and IShares go up and down completely randomly.

Pair Corralation between Volatility Shares and IShares

If you would invest  4,902  in Volatility Shares Trust on October 11, 2024 and sell it today you would earn a total of  275.00  from holding Volatility Shares Trust or generate 5.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

Volatility Shares Trust  vs.  IShares

Volatility Shares Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volatility Shares Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Volatility Shares showed solid returns over the last few months and may actually be approaching a breakup point.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Volatility Shares and IShares

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

The idea behind Volatility Shares Trust and IShares 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.