Correlation Between IShares Trust and Vanguard World
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Vanguard World 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 Trust and Vanguard World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Vanguard World, you can compare the effects of market volatilities on IShares Trust and Vanguard World 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 Trust with a short position of Vanguard World. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Vanguard World.
Diversification Opportunities for IShares Trust and Vanguard World
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Vanguard is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Vanguard World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard World and IShares Trust 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 Trust are associated (or correlated) with Vanguard World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard World has no effect on the direction of IShares Trust i.e., IShares Trust and Vanguard World go up and down completely randomly.
Pair Corralation between IShares Trust and Vanguard World
Assuming the 90 days trading horizon IShares Trust is expected to generate 2.86 times less return on investment than Vanguard World. In addition to that, IShares Trust is 1.9 times more volatile than Vanguard World. It trades about 0.02 of its total potential returns per unit of risk. Vanguard World is currently generating about 0.09 per unit of volatility. If you would invest 408,611 in Vanguard World on September 2, 2024 and sell it today you would earn a total of 136,389 from holding Vanguard World or generate 33.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Vanguard World
Performance |
| Timeline |
| iShares Trust |
| Vanguard World |
IShares Trust and Vanguard World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Vanguard World
The main advantage of trading using opposite IShares Trust and Vanguard World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Vanguard World 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 World will offset losses from the drop in Vanguard World's long position.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| Vanguard World vs. Vanguard Funds Public | Vanguard World vs. Vanguard Specialized Funds | Vanguard World vs. Vanguard World | Vanguard World vs. Vanguard Index 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |