Correlation Between IShares Core and Vanguard
Can any of the company-specific risk be diversified away by investing in both IShares Core and Vanguard 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 IShares Core and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core CHF and Vanguard SP 500, you can compare the effects of market volatilities on IShares Core and Vanguard 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 IShares Core with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Vanguard.
Diversification Opportunities for IShares Core and Vanguard
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Vanguard is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core CHF and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and IShares Core 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 iShares Core CHF are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of IShares Core i.e., IShares Core and Vanguard go up and down completely randomly.
Pair Corralation between IShares Core and Vanguard
Assuming the 90 days trading horizon iShares Core CHF is expected to under-perform the Vanguard. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core CHF is 3.61 times less risky than Vanguard. The etf trades about -0.08 of its potential returns per unit of risk. The Vanguard SP 500 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,146 in Vanguard SP 500 on October 11, 2024 and sell it today you would earn a total of 62.00 from holding Vanguard SP 500 or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
iShares Core CHF vs. Vanguard SP 500
Performance |
| Timeline |
| iShares Core CHF |
| Vanguard SP 500 |
IShares Core and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Vanguard
The main advantage of trading using opposite IShares Core and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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