Correlation Between IShares IBoxx and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx 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 IBoxx 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 iBoxx High and Vanguard Total Corporate, you can compare the effects of market volatilities on IShares IBoxx 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 IBoxx with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Vanguard Total.
Diversification Opportunities for IShares IBoxx and Vanguard Total
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and Vanguard is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Vanguard Total Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Corporate and IShares IBoxx 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 iBoxx High 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 Corporate has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Vanguard Total go up and down completely randomly.
Pair Corralation between IShares IBoxx and Vanguard Total
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 0.48 times more return on investment than Vanguard Total. However, iShares iBoxx High is 2.1 times less risky than Vanguard Total. It trades about 0.35 of its potential returns per unit of risk. Vanguard Total Corporate is currently generating about 0.13 per unit of risk. If you would invest 7,861 in iShares iBoxx High on September 5, 2024 and sell it today you would earn a total of 123.00 from holding iShares iBoxx High or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. Vanguard Total Corporate
Performance |
| Timeline |
| iShares iBoxx High |
| Vanguard Total Corporate |
IShares IBoxx and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Vanguard Total
The main advantage of trading using opposite IShares IBoxx and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx 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 IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. SPDR Bloomberg High | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 20 Year |
| Vanguard Total vs. iShares iBoxx High | Vanguard Total vs. iShares 1 3 Year | Vanguard Total vs. iShares TIPS Bond | Vanguard Total vs. iShares 7 10 Year |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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