Correlation Between IShares Regional and Vanguard Industrials
Can any of the company-specific risk be diversified away by investing in both IShares Regional and Vanguard Industrials 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 Regional and Vanguard Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Regional Banks and Vanguard Industrials Index, you can compare the effects of market volatilities on IShares Regional and Vanguard Industrials 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 Regional with a short position of Vanguard Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Regional and Vanguard Industrials.
Diversification Opportunities for IShares Regional and Vanguard Industrials
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Regional Banks and Vanguard Industrials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Industrials and IShares Regional 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 Regional Banks are associated (or correlated) with Vanguard Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Industrials has no effect on the direction of IShares Regional i.e., IShares Regional and Vanguard Industrials go up and down completely randomly.
Pair Corralation between IShares Regional and Vanguard Industrials
Considering the 90-day investment horizon iShares Regional Banks is expected to generate 1.11 times more return on investment than Vanguard Industrials. However, IShares Regional is 1.11 times more volatile than Vanguard Industrials Index. It trades about -0.1 of its potential returns per unit of risk. Vanguard Industrials Index is currently generating about -0.16 per unit of risk. If you would invest 5,507 in iShares Regional Banks on September 12, 2024 and sell it today you would lose (108.00) from holding iShares Regional Banks or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Regional Banks vs. Vanguard Industrials Index
Performance |
| Timeline |
| iShares Regional Banks |
| Vanguard Industrials |
IShares Regional and Vanguard Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Regional and Vanguard Industrials
The main advantage of trading using opposite IShares Regional and Vanguard Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Regional position performs unexpectedly, Vanguard Industrials 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 Industrials will offset losses from the drop in Vanguard Industrials' long position.| IShares Regional vs. Invesco SP 500 | IShares Regional vs. Invesco SP 500 | IShares Regional vs. Invesco SP 500 | IShares Regional vs. Aquagold International |
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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