Correlation Between IShares Global and V Square

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Can any of the company-specific risk be diversified away by investing in both IShares Global and V Square 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 Global and V Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global 100 and V Square Quantitative Management, you can compare the effects of market volatilities on IShares Global and V Square 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 Global with a short position of V Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and V Square.

Diversification Opportunities for IShares Global and V Square

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between IShares and VMAT is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global 100 and V Square Quantitative Manageme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Square Quantitative and IShares Global 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 Global 100 are associated (or correlated) with V Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Square Quantitative has no effect on the direction of IShares Global i.e., IShares Global and V Square go up and down completely randomly.

Pair Corralation between IShares Global and V Square

Considering the 90-day investment horizon IShares Global is expected to generate 1.13 times less return on investment than V Square. But when comparing it to its historical volatility, iShares Global 100 is 1.04 times less risky than V Square. It trades about 0.1 of its potential returns per unit of risk. V Square Quantitative Management is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,443  in V Square Quantitative Management on October 13, 2024 and sell it today you would earn a total of  316.00  from holding V Square Quantitative Management or generate 12.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy25.6%
ValuesDaily Returns

iShares Global 100  vs.  V Square Quantitative Manageme

 Performance 
       Timeline  
iShares Global 100 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares Global 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
V Square Quantitative 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days V Square Quantitative Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, V Square is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

IShares Global and V Square Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Global and V Square

The main advantage of trading using opposite IShares Global and V Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, V Square 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 V Square will offset losses from the drop in V Square's long position.
The idea behind iShares Global 100 and V Square Quantitative Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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