Correlation Between Vanguard Specialized and IShares Global

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

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

Diversification Opportunities for Vanguard Specialized and IShares Global

-0.49

Correlation Coefficient

Vanguard Specialized  IShares Global

Very good diversification

The 3 months correlation between Vanguard and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Specialized Funds and iShares Global Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Timber and Vanguard Specialized 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 Vanguard Specialized Funds are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Timber has no effect on the direction of Vanguard Specialized i.e., Vanguard Specialized and IShares Global go up and down completely randomly.

Pair Corralation between Vanguard Specialized and IShares Global

Assuming the 90 days trading horizon Vanguard Specialized Funds is expected to under-perform the IShares Global. In addition to that, Vanguard Specialized is 26.35 times more volatile than iShares Global Timber. It trades about -0.07 of its total potential returns per unit of risk. iShares Global Timber is currently generating about 0.13 per unit of volatility. If you would invest  177,917  in iShares Global Timber on September 27, 2024 and sell it today you would earn a total of  680.00  from holding iShares Global Timber or generate 0.38% return on investment over 90 days.

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

Vanguard Specialized Funds  vs.  iShares Global Timber

Vanguard Specialized

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Specialized Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Vanguard Specialized is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Global Timber

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Timber are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Specialized and IShares Global

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

The idea behind Vanguard Specialized Funds and iShares Global Timber 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.