Correlation Between IShares AEX and Vanguard
Can any of the company-specific risk be diversified away by investing in both IShares AEX 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 AEX and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares AEX UCITS and Vanguard SP 500, you can compare the effects of market volatilities on IShares AEX 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 AEX with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares AEX and Vanguard.
Diversification Opportunities for IShares AEX and Vanguard
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and Vanguard is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares AEX UCITS 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 AEX 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 AEX UCITS 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 AEX i.e., IShares AEX and Vanguard go up and down completely randomly.
Pair Corralation between IShares AEX and Vanguard
Assuming the 90 days trading horizon iShares AEX UCITS is expected to generate 1.06 times more return on investment than Vanguard. However, IShares AEX is 1.06 times more volatile than Vanguard SP 500. It trades about 0.21 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.2 per unit of risk. If you would invest 8,643 in iShares AEX UCITS on September 13, 2024 and sell it today you would earn a total of 276.00 from holding iShares AEX UCITS or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares AEX UCITS vs. Vanguard SP 500
Performance |
| Timeline |
| iShares AEX UCITS |
| Vanguard SP 500 |
IShares AEX and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares AEX and Vanguard
The main advantage of trading using opposite IShares AEX and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares AEX 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 AEX vs. Vanguard SP 500 | IShares AEX vs. iShares II Public | IShares AEX vs. Vanguard FTSE All World | IShares AEX vs. iShares SP 500 |
| Vanguard vs. SPDR Dow Jones | Vanguard vs. iShares Core MSCI | Vanguard vs. iShares SP 500 | Vanguard vs. iShares Core MSCI |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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