Correlation Between IShares Dividend and Vanguard Dividend

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

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

Diversification Opportunities for IShares Dividend and Vanguard Dividend

0.42

Correlation Coefficient

IShares Dividend  Vanguard Dividend

Very weak diversification

The 3 months correlation between IShares and Vanguard is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend Growers and Vanguard Dividend Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Dividend and IShares Dividend 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 Dividend Growers are associated (or correlated) with Vanguard Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Dividend has no effect on the direction of IShares Dividend i.e., IShares Dividend and Vanguard Dividend go up and down completely randomly.

Pair Corralation between IShares Dividend and Vanguard Dividend

Assuming the 90 days trading horizon IShares Dividend is expected to generate 12.16 times less return on investment than Vanguard Dividend. But when comparing it to its historical volatility, iShares Dividend Growers is 1.19 times less risky than Vanguard Dividend. It trades about 0.02 of its potential returns per unit of risk. Vanguard Dividend Appreciation is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8,962  in Vanguard Dividend Appreciation on September 12, 2024 and sell it today you would earn a total of  737.00  from holding Vanguard Dividend Appreciation or generate 8.22% return on investment over 90 days.

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

iShares Dividend Growers  vs.  Vanguard Dividend Appreciation

iShares Dividend Growers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dividend Growers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, IShares Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vanguard Dividend

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Dividend Appreciation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Vanguard Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Dividend and Vanguard Dividend

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

The idea behind iShares Dividend Growers and Vanguard Dividend Appreciation 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.