Correlation Between Vanguard Bond and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Vanguard Bond and IShares MSCI 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 Bond and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Bond Index and iShares MSCI Netherlands, you can compare the effects of market volatilities on Vanguard Bond and IShares MSCI 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 Bond with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Bond and IShares MSCI.
Diversification Opportunities for Vanguard Bond and IShares MSCI
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and IShares is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Bond Index and iShares MSCI Netherlands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Netherlands and Vanguard Bond 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 Bond Index are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Netherlands has no effect on the direction of Vanguard Bond i.e., Vanguard Bond and IShares MSCI go up and down completely randomly.
Pair Corralation between Vanguard Bond and IShares MSCI
Assuming the 90 days trading horizon Vanguard Bond is expected to generate 1.17 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Vanguard Bond Index is 1.13 times less risky than IShares MSCI. It trades about 0.07 of its potential returns per unit of risk. iShares MSCI Netherlands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 70,586 in iShares MSCI Netherlands on September 20, 2024 and sell it today you would earn a total of 25,733 from holding iShares MSCI Netherlands or generate 36.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.54% |
| Values | Daily Returns |
Vanguard Bond Index vs. iShares MSCI Netherlands
Performance |
| Timeline |
| Vanguard Bond Index |
| iShares MSCI Netherlands |
Vanguard Bond and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Bond and IShares MSCI
The main advantage of trading using opposite Vanguard Bond and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Bond position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| Vanguard Bond vs. Vanguard Funds Public | Vanguard Bond vs. Vanguard Specialized Funds | Vanguard Bond vs. Vanguard World | Vanguard Bond vs. Vanguard Index Funds |
| IShares MSCI vs. Vanguard Index Funds | IShares MSCI vs. Vanguard Index Funds | IShares MSCI vs. SPDR SP 500 | IShares MSCI vs. Vanguard Bond Index |
Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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