Correlation Between IShares Telecommunicatio and VR

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

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

Diversification Opportunities for IShares Telecommunicatio and VR

0.0

Correlation Coefficient

IShares Telecommunicatio  VR

Pay attention - limited upside

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

Pair Corralation between IShares Telecommunicatio and VR

If you would invest  2,748  in iShares Telecommunications ETF on December 4, 2024 and sell it today you would earn a total of  74.00  from holding iShares Telecommunications ETF or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares Telecommunications ETF  vs.  VR

IShares Telecommunicatio

Risk-Adjusted Performance

Weak

Over the last 90 days iShares Telecommunications ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Telecommunicatio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VR

Risk-Adjusted Performance

Very Weak

Over the last 90 days VR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, VR is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Telecommunicatio and VR

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

The idea behind iShares Telecommunications ETF and VR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.