Correlation Between VIIX and IShares Global

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

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

Diversification Opportunities for VIIX and IShares Global

-0.8

Correlation Coefficient

VIIX  IShares Global

Pay attention - limited upside

The 3 months correlation between VIIX and IShares is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and iShares Global Comm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Comm and VIIX 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 VIIX are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Comm has no effect on the direction of VIIX i.e., VIIX and IShares Global go up and down completely randomly.

Pair Corralation between VIIX and IShares Global

Given the investment horizon of 90 days VIIX is expected to generate 90.01 times more return on investment than IShares Global. However, VIIX is 90.01 times more volatile than iShares Global Comm. It trades about 0.09 of its potential returns per unit of risk. iShares Global Comm is currently generating about 0.1 per unit of risk. If you would invest  603.00  in VIIX on October 22, 2024 and sell it today you would earn a total of  6,246  from holding VIIX or generate 1035.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	24.4%
Values	Daily Returns

VIIX  vs.  iShares Global Comm

VIIX

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Global Comm

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Comm are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VIIX and IShares Global

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

The idea behind VIIX and iShares Global Comm 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.