Correlation Between IShares ESG and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Vanguard Total 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 ESG and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Aggregate and Vanguard Total World, you can compare the effects of market volatilities on IShares ESG and Vanguard Total 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 ESG with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Vanguard Total.
Diversification Opportunities for IShares ESG and Vanguard Total
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aggregate and Vanguard Total World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total World and IShares ESG 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 ESG Aggregate are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total World has no effect on the direction of IShares ESG i.e., IShares ESG and Vanguard Total go up and down completely randomly.
Pair Corralation between IShares ESG and Vanguard Total
Given the investment horizon of 90 days IShares ESG is expected to generate 1.1 times less return on investment than Vanguard Total. In addition to that, IShares ESG is 1.27 times more volatile than Vanguard Total World. It trades about 0.1 of its total potential returns per unit of risk. Vanguard Total World is currently generating about 0.14 per unit of volatility. If you would invest 6,694 in Vanguard Total World on September 1, 2024 and sell it today you would earn a total of 306.00 from holding Vanguard Total World or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares ESG Aggregate vs. Vanguard Total World
Performance |
| Timeline |
| iShares ESG Aggregate |
| Vanguard Total World |
IShares ESG and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Vanguard Total
The main advantage of trading using opposite IShares ESG and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| 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 |
| Vanguard Total vs. iShares ESG USD | Vanguard Total vs. iShares ESG 1 5 | Vanguard Total vs. iShares ESG Aggregate | Vanguard Total 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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