Correlation Between Vanguard Total and IShares

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

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

Diversification Opportunities for Vanguard Total and IShares

-0.41

Correlation Coefficient

Vanguard Total  IShares

Very good diversification

The 3 months correlation between Vanguard and IShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and Vanguard Total 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 Total Stock are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Vanguard Total i.e., Vanguard Total and IShares go up and down completely randomly.

Pair Corralation between Vanguard Total and IShares

If you would invest  28,462  in Vanguard Total Stock on September 25, 2024 and sell it today you would earn a total of  1,151  from holding Vanguard Total Stock or generate 4.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.38%
Values	Daily Returns

Vanguard Total Stock  vs.  IShares

Vanguard Total Stock

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, IShares is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and IShares

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

The idea behind Vanguard Total Stock and IShares 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.