Correlation Between IShares Consumer and VCLO
Can any of the company-specific risk be diversified away by investing in both IShares Consumer and VCLO 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 Consumer and VCLO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Consumer Discretionary and VCLO, you can compare the effects of market volatilities on IShares Consumer and VCLO 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 Consumer with a short position of VCLO. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Consumer and VCLO.
Diversification Opportunities for IShares Consumer and VCLO
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and VCLO is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and VCLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VCLO and IShares Consumer 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 Consumer Discretionary are associated (or correlated) with VCLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VCLO has no effect on the direction of IShares Consumer i.e., IShares Consumer and VCLO go up and down completely randomly.
Pair Corralation between IShares Consumer and VCLO
Considering the 90-day investment horizon iShares Consumer Discretionary is expected to generate 0.52 times more return on investment than VCLO. However, iShares Consumer Discretionary is 1.93 times less risky than VCLO. It trades about 0.1 of its potential returns per unit of risk. VCLO is currently generating about -0.08 per unit of risk. If you would invest 6,019 in iShares Consumer Discretionary on September 3, 2024 and sell it today you would earn a total of 3,750 from holding iShares Consumer Discretionary or generate 62.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 21.21% |
| Values | Daily Returns |
iShares Consumer Discretionary vs. VCLO
Performance |
| Timeline |
| iShares Consumer Dis |
| VCLO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Consumer and VCLO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Consumer and VCLO
The main advantage of trading using opposite IShares Consumer and VCLO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Consumer position performs unexpectedly, VCLO 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 VCLO will offset losses from the drop in VCLO's long position.| IShares Consumer vs. iShares Consumer Staples | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Basic Materials | IShares Consumer vs. iShares Utilities ETF |
| VCLO vs. FT Vest Equity | VCLO vs. Zillow Group Class | VCLO vs. Northern Lights | VCLO vs. VanEck Vectors Moodys |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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