Correlation Between IShares Trust and Vanguard Core
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Vanguard Core 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 Core 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 Core Plus, you can compare the effects of market volatilities on IShares Trust and Vanguard Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Vanguard Core.
Diversification Opportunities for IShares Trust and Vanguard Core
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Vanguard Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Core Plus 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Core Plus has no effect on the direction of IShares Trust i.e., IShares Trust and Vanguard Core go up and down completely randomly.
Pair Corralation between IShares Trust and Vanguard Core
Given the investment horizon of 90 days IShares Trust is expected to generate 2.17 times less return on investment than Vanguard Core. But when comparing it to its historical volatility, iShares Trust is 1.19 times less risky than Vanguard Core. It trades about 0.03 of its potential returns per unit of risk. Vanguard Core Plus is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,583 in Vanguard Core Plus on October 22, 2024 and sell it today you would earn a total of 23.50 from holding Vanguard Core Plus or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Vanguard Core Plus
Performance |
| Timeline |
| iShares Trust |
| Vanguard Core Plus |
IShares Trust and Vanguard Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Vanguard Core
The main advantage of trading using opposite IShares Trust and Vanguard Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Vanguard Core 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 Core will offset losses from the drop in Vanguard Core's long position.| IShares Trust vs. iShares ESG Aggregate | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG USD |
| Vanguard Core vs. Columbia Diversified Fixed | Vanguard Core vs. Doubleline Etf Trust | Vanguard Core vs. Virtus Newfleet ABSMBS | Vanguard Core vs. Vident Core Bond |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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