Correlation Between IShares SP and VictoryShares Value

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

By analyzing existing cross correlation between iShares SP 500 and VictoryShares Value Momentum, you can compare the effects of market volatilities on IShares SP and VictoryShares Value 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 SP with a short position of VictoryShares Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and VictoryShares Value.

Diversification Opportunities for IShares SP and VictoryShares Value

0.99

Correlation Coefficient

IShares SP  VictoryShares Value

No risk reduction

The 3 months correlation between IShares and VictoryShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and VictoryShares Value Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Value and IShares SP 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 SP 500 are associated (or correlated) with VictoryShares Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Value has no effect on the direction of IShares SP i.e., IShares SP and VictoryShares Value go up and down completely randomly.

Pair Corralation between IShares SP and VictoryShares Value

Considering the 90-day investment horizon IShares SP is expected to generate 1.25 times less return on investment than VictoryShares Value. But when comparing it to its historical volatility, iShares SP 500 is 1.06 times less risky than VictoryShares Value. It trades about 0.13 of its potential returns per unit of risk. VictoryShares Value Momentum is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,882  in VictoryShares Value Momentum on May 5, 2025 and sell it today you would earn a total of  568.00  from holding VictoryShares Value Momentum or generate 7.21% return on investment over 90 days.

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

iShares SP 500  vs.  VictoryShares Value Momentum

iShares SP 500

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares SP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

VictoryShares Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares Value Momentum are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VictoryShares Value may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IShares SP and VictoryShares Value

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

The idea behind iShares SP 500 and VictoryShares Value Momentum 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.