Correlation Between Vanguard Bond and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Bond and IShares Trust 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 Trust 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 Trust , you can compare the effects of market volatilities on Vanguard Bond and IShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Bond and IShares Trust.
Diversification Opportunities for Vanguard Bond and IShares Trust
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and IShares is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Bond Index and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Vanguard Bond i.e., Vanguard Bond and IShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Bond and IShares Trust
Assuming the 90 days trading horizon Vanguard Bond Index is expected to generate 0.7 times more return on investment than IShares Trust. However, Vanguard Bond Index is 1.43 times less risky than IShares Trust. It trades about 0.23 of its potential returns per unit of risk. iShares Trust is currently generating about 0.16 per unit of risk. If you would invest 144,946 in Vanguard Bond Index on August 30, 2024 and sell it today you would earn a total of 7,354 from holding Vanguard Bond Index or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Bond Index vs. iShares Trust
Performance |
| Timeline |
| Vanguard Bond Index |
| iShares Trust |
Vanguard Bond and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Bond and IShares Trust
The main advantage of trading using opposite Vanguard Bond and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Bond position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust'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 Trust vs. SPDR SP 500 | IShares Trust vs. Vanguard Bond Index | IShares Trust vs. Invesco QQQ Trust | IShares Trust vs. Vanguard Tax Managed Funds |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |