Correlation Between VictoryShares International and IShares MSCI

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

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

Diversification Opportunities for VictoryShares International and IShares MSCI

0.83

Correlation Coefficient

VictoryShares International  IShares MSCI

Very poor diversification

The 3 months correlation between VictoryShares and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares International Vo and iShares MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Global and VictoryShares International 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 VictoryShares International Volatility are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Global has no effect on the direction of VictoryShares International i.e., VictoryShares International and IShares MSCI go up and down completely randomly.

Pair Corralation between VictoryShares International and IShares MSCI

Considering the 90-day investment horizon VictoryShares International Volatility is expected to generate 0.85 times more return on investment than IShares MSCI. However, VictoryShares International Volatility is 1.17 times less risky than IShares MSCI. It trades about 0.19 of its potential returns per unit of risk. iShares MSCI Global is currently generating about 0.03 per unit of risk. If you would invest  4,182  in VictoryShares International Volatility on December 30, 2024 and sell it today you would earn a total of  378.00  from holding VictoryShares International Volatility or generate 9.04% return on investment over 90 days.

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

VictoryShares International Vo  vs.  iShares MSCI Global

VictoryShares International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares International Volatility are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, VictoryShares International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares MSCI Global

Risk-Adjusted Performance

Weak

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

Pair Trading with VictoryShares International and IShares MSCI

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

The idea behind VictoryShares International Volatility and iShares MSCI Global 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 Transaction History module to view history of all your transactions and understand their impact on performance.