Correlation Between IREIT MarketVector and United States

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

By analyzing existing cross correlation between iREIT MarketVector and United States Oil, you can compare the effects of market volatilities on IREIT MarketVector and United States 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 IREIT MarketVector with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of IREIT MarketVector and United States.

Diversification Opportunities for IREIT MarketVector and United States

-0.71

Correlation Coefficient

IREIT MarketVector  United States

Pay attention - limited upside

The 3 months correlation between IREIT and United is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil and IREIT MarketVector 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 iREIT MarketVector are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Oil has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and United States go up and down completely randomly.

Pair Corralation between IREIT MarketVector and United States

Given the investment horizon of 90 days iREIT MarketVector is expected to under-perform the United States. But the etf apears to be less risky and, when comparing its historical volatility, iREIT MarketVector is 1.67 times less risky than United States. The etf trades about -0.13 of its potential returns per unit of risk. The United States Oil is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,423  in United States Oil on October 25, 2024 and sell it today you would earn a total of  620.00  from holding United States Oil or generate 8.35% return on investment over 90 days.

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

iREIT MarketVector  vs.  United States Oil

iREIT MarketVector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

United States Oil

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States Oil are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, United States may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IREIT MarketVector and United States

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

The idea behind iREIT MarketVector and United States Oil 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.