Correlation Between Vanguard Total and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and IShares ESG 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 ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and iShares ESG Aggregate, you can compare the effects of market volatilities on Vanguard Total and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and IShares ESG.
Diversification Opportunities for Vanguard Total and IShares ESG
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and iShares ESG Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aggregate 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 Bond are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aggregate has no effect on the direction of Vanguard Total i.e., Vanguard Total and IShares ESG go up and down completely randomly.
Pair Corralation between Vanguard Total and IShares ESG
Considering the 90-day investment horizon Vanguard Total Bond is expected to under-perform the IShares ESG. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Total Bond is 1.03 times less risky than IShares ESG. The etf trades about -0.11 of its potential returns per unit of risk. The iShares ESG Aggregate is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 4,702 in iShares ESG Aggregate on October 26, 2024 and sell it today you would lose (49.00) from holding iShares ESG Aggregate or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.5% |
| Values | Daily Returns |
Vanguard Total Bond vs. iShares ESG Aggregate
Performance |
| Timeline |
| Vanguard Total Bond |
| iShares ESG Aggregate |
Vanguard Total and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and IShares ESG
The main advantage of trading using opposite Vanguard Total and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
| IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. iShares ESG USD | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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