Correlation Between VictoryShares THB and IShares Exponential

Can any of the company-specific risk be diversified away by investing in both VictoryShares THB and IShares Exponential 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 Exponential 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 Exponential Technologies, you can compare the effects of market volatilities on VictoryShares THB and IShares Exponential 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 Exponential. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares THB and IShares Exponential.

Diversification Opportunities for VictoryShares THB and IShares Exponential

0.35

Correlation Coefficient

VictoryShares THB  IShares Exponential

Weak diversification

The 3 months correlation between VictoryShares and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and iShares Exponential Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Exponential 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 Exponential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Exponential has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and IShares Exponential go up and down completely randomly.

Pair Corralation between VictoryShares THB and IShares Exponential

Given the investment horizon of 90 days VictoryShares THB Mid is expected to under-perform the IShares Exponential. But the etf apears to be less risky and, when comparing its historical volatility, VictoryShares THB Mid is 1.23 times less risky than IShares Exponential. The etf trades about -0.06 of its potential returns per unit of risk. The iShares Exponential Technologies is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,076  in iShares Exponential Technologies on December 22, 2024 and sell it today you would lose (89.00) from holding iShares Exponential Technologies or give up 1.46% of portfolio value over 90 days.

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

VictoryShares THB Mid  vs.  iShares Exponential Technologi

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 relatively invariable fundamental indicators, VictoryShares THB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

iShares Exponential

Risk-Adjusted Performance

Very Weak

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

Pair Trading with VictoryShares THB and IShares Exponential

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

The idea behind VictoryShares THB Mid and iShares Exponential Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.