Correlation Between Vaalco Energy and IShares Tech

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

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

Diversification Opportunities for Vaalco Energy and IShares Tech

0.66

Correlation Coefficient

Vaalco Energy  IShares Tech

Poor diversification

The 3 months correlation between Vaalco and IShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy and iShares Tech Breakthrough in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Tech Breakthrough and Vaalco Energy 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 Vaalco Energy are associated (or correlated) with IShares Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Tech Breakthrough has no effect on the direction of Vaalco Energy i.e., Vaalco Energy and IShares Tech go up and down completely randomly.

Pair Corralation between Vaalco Energy and IShares Tech

Considering the 90-day investment horizon Vaalco Energy is expected to generate 3.03 times more return on investment than IShares Tech. However, Vaalco Energy is 3.03 times more volatile than iShares Tech Breakthrough. It trades about 0.07 of its potential returns per unit of risk. iShares Tech Breakthrough is currently generating about 0.2 per unit of risk. If you would invest  325.00  in Vaalco Energy on May 6, 2025 and sell it today you would earn a total of  35.00  from holding Vaalco Energy or generate 10.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Vaalco Energy  vs.  iShares Tech Breakthrough

Vaalco Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vaalco Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vaalco Energy showed solid returns over the last few months and may actually be approaching a breakup point.

iShares Tech Breakthrough

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Tech Breakthrough are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, IShares Tech may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vaalco Energy and IShares Tech

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

The idea behind Vaalco Energy and iShares Tech Breakthrough 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.