Correlation Between IShares Russell and VictoryShares Multi

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

By analyzing existing cross correlation between iShares Russell 1000 and VictoryShares Multi Factor Minimum, you can compare the effects of market volatilities on IShares Russell and VictoryShares Multi 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 Russell with a short position of VictoryShares Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and VictoryShares Multi.

Diversification Opportunities for IShares Russell and VictoryShares Multi

0.91

Correlation Coefficient

IShares Russell  VictoryShares Multi

Almost no diversification

The 3 months correlation between IShares and VictoryShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and VictoryShares Multi Factor Min in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Multi and IShares Russell 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 Russell 1000 are associated (or correlated) with VictoryShares Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Multi has no effect on the direction of IShares Russell i.e., IShares Russell and VictoryShares Multi go up and down completely randomly.

Pair Corralation between IShares Russell and VictoryShares Multi

Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 1.27 times more return on investment than VictoryShares Multi. However, IShares Russell is 1.27 times more volatile than VictoryShares Multi Factor Minimum. It trades about 0.03 of its potential returns per unit of risk. VictoryShares Multi Factor Minimum is currently generating about 0.0 per unit of risk. If you would invest  18,386  in iShares Russell 1000 on December 30, 2024 and sell it today you would earn a total of  241.00  from holding iShares Russell 1000 or generate 1.31% return on investment over 90 days.

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

iShares Russell 1000  vs.  VictoryShares Multi Factor Min

iShares Russell 1000

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell 1000 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Russell is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

VictoryShares Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares Multi Factor Minimum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, VictoryShares Multi is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Russell and VictoryShares Multi

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

The idea behind iShares Russell 1000 and VictoryShares Multi Factor Minimum 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.