Correlation Between VR and IShares Global

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

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

Diversification Opportunities for VR and IShares Global

0.82

Correlation Coefficient

VR  IShares Global

Very poor diversification

The 3 months correlation between VR and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding VR 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 VR 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 VR 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 VR i.e., VR and IShares Global go up and down completely randomly.

Pair Corralation between VR and IShares Global

If you would invest  9,580  in iShares Global Comm on September 28, 2024 and sell it today you would earn a total of  302.00  from holding iShares Global Comm or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	5.0%
Values	Daily Returns

VR  vs.  iShares Global Comm

VR

Risk-Adjusted Performance

0 of 100

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

iShares Global Comm

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Comm are ranked lower than 8 (%) 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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VR and IShares Global

The main advantage of trading using opposite VR and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VR 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 VR 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.