Correlation Between VictoryShares THB and IShares Paris

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

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

Diversification Opportunities for VictoryShares THB and IShares Paris

-0.03

Correlation Coefficient

VictoryShares THB  IShares Paris

Good diversification

The 3 months correlation between VictoryShares and IShares is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and iShares Paris Aligned Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Paris Aligned and VictoryShares THB 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 THB Mid are associated (or correlated) with IShares Paris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Paris Aligned has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and IShares Paris go up and down completely randomly.

Pair Corralation between VictoryShares THB and IShares Paris

Given the investment horizon of 90 days VictoryShares THB Mid is expected to under-perform the IShares Paris. In addition to that, VictoryShares THB is 1.12 times more volatile than iShares Paris Aligned Climate. It trades about -0.21 of its total potential returns per unit of risk. iShares Paris Aligned Climate is currently generating about 0.07 per unit of volatility. If you would invest  5,295  in iShares Paris Aligned Climate on December 2, 2024 and sell it today you would earn a total of  168.00  from holding iShares Paris Aligned Climate or generate 3.17% return on investment over 90 days.

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

VictoryShares THB Mid  vs.  iShares Paris Aligned Climate

VictoryShares THB Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

iShares Paris Aligned

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Paris Aligned Climate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, IShares Paris is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VictoryShares THB and IShares Paris

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

The idea behind VictoryShares THB Mid and iShares Paris Aligned Climate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.