Correlation Between IShares VII and SP 500
Can any of the company-specific risk be diversified away by investing in both IShares VII and SP 500 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 IShares VII and SP 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and SP 500 VIX, you can compare the effects of market volatilities on IShares VII and SP 500 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 IShares VII with a short position of SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and SP 500.
Diversification Opportunities for IShares VII and SP 500
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and VILX is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and SP 500 VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 VIX and IShares VII 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 iShares VII PLC are associated (or correlated) with SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 VIX has no effect on the direction of IShares VII i.e., IShares VII and SP 500 go up and down completely randomly.
Pair Corralation between IShares VII and SP 500
Assuming the 90 days trading horizon iShares VII PLC is expected to generate 0.06 times more return on investment than SP 500. However, iShares VII PLC is 16.43 times less risky than SP 500. It trades about 0.18 of its potential returns per unit of risk. SP 500 VIX is currently generating about -0.06 per unit of risk. If you would invest 915,200 in iShares VII PLC on September 12, 2024 and sell it today you would earn a total of 15,000 from holding iShares VII PLC or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares VII PLC vs. SP 500 VIX
Performance |
| Timeline |
| iShares VII PLC |
| SP 500 VIX |
IShares VII and SP 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and SP 500
The main advantage of trading using opposite IShares VII and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.| IShares VII vs. iShares MSCI Japan | IShares VII vs. iShares JP Morgan | IShares VII vs. iShares MSCI Europe | IShares VII vs. iShares Nasdaq Biotechnology |
| SP 500 vs. WisdomTree Natural Gas | SP 500 vs. WisdomTree Natural Gas | SP 500 vs. Leverage Shares 2x | SP 500 vs. WisdomTree Silver 3x |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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