Correlation Between IShares IBonds and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both IShares IBonds and Vanguard Extended 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 IBonds and Vanguard Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBonds Dec and Vanguard Extended Duration, you can compare the effects of market volatilities on IShares IBonds and Vanguard Extended 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 IBonds with a short position of Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBonds and Vanguard Extended.
Diversification Opportunities for IShares IBonds and Vanguard Extended
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Vanguard is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBonds Dec and Vanguard Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended and IShares IBonds 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 iBonds Dec are associated (or correlated) with Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended has no effect on the direction of IShares IBonds i.e., IShares IBonds and Vanguard Extended go up and down completely randomly.
Pair Corralation between IShares IBonds and Vanguard Extended
Given the investment horizon of 90 days iShares iBonds Dec is expected to generate 0.07 times more return on investment than Vanguard Extended. However, iShares iBonds Dec is 13.71 times less risky than Vanguard Extended. It trades about -0.19 of its potential returns per unit of risk. Vanguard Extended Duration is currently generating about -0.09 per unit of risk. If you would invest 2,229 in iShares iBonds Dec on August 25, 2024 and sell it today you would lose (10.00) from holding iShares iBonds Dec or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBonds Dec vs. Vanguard Extended Duration
Performance |
| Timeline |
| iShares iBonds Dec |
| Vanguard Extended |
IShares IBonds and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBonds and Vanguard Extended
The main advantage of trading using opposite IShares IBonds and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBonds position performs unexpectedly, Vanguard Extended 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 Extended will offset losses from the drop in Vanguard Extended's long position.| IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec |
| Vanguard Extended vs. iShares Treasury Floating | Vanguard Extended vs. iShares iBonds Dec | Vanguard Extended vs. iShares iBonds Dec | Vanguard Extended vs. iShares 0 3 Month |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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