Correlation Between Virtus ETF and IShares JP

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

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

Diversification Opportunities for Virtus ETF and IShares JP

0.89

Correlation Coefficient

Virtus ETF  IShares JP

Very poor diversification

The 3 months correlation between Virtus and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan and Virtus ETF 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 Virtus ETF Trust are associated (or correlated) with IShares JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of Virtus ETF i.e., Virtus ETF and IShares JP go up and down completely randomly.

Pair Corralation between Virtus ETF and IShares JP

Given the investment horizon of 90 days Virtus ETF is expected to generate 2.11 times less return on investment than IShares JP. But when comparing it to its historical volatility, Virtus ETF Trust is 1.3 times less risky than IShares JP. It trades about 0.06 of its potential returns per unit of risk. iShares JP Morgan is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,758  in iShares JP Morgan on December 28, 2024 and sell it today you would earn a total of  64.00  from holding iShares JP Morgan or generate 1.7% return on investment over 90 days.

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

Virtus ETF Trust  vs.  iShares JP Morgan

Virtus ETF Trust

Risk-Adjusted Performance

Insignificant

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

iShares JP Morgan

Risk-Adjusted Performance

OK

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

Pair Trading with Virtus ETF and IShares JP

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

The idea behind Virtus ETF Trust and iShares JP Morgan 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.