Correlation Between IShares International and Vanguard International
Can any of the company-specific risk be diversified away by investing in both IShares International and Vanguard International 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 International and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Select and Vanguard International High, you can compare the effects of market volatilities on IShares International and Vanguard International 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 International with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and Vanguard International.
Diversification Opportunities for IShares International and Vanguard International
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Select and Vanguard International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and IShares International 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 International Select are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of IShares International i.e., IShares International and Vanguard International go up and down completely randomly.
Pair Corralation between IShares International and Vanguard International
Considering the 90-day investment horizon IShares International is expected to generate 1.19 times less return on investment than Vanguard International. But when comparing it to its historical volatility, iShares International Select is 1.1 times less risky than Vanguard International. It trades about 0.32 of its potential returns per unit of risk. Vanguard International High is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 6,756 in Vanguard International High on November 2, 2024 and sell it today you would earn a total of 341.00 from holding Vanguard International High or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
iShares International Select vs. Vanguard International High
Performance |
| Timeline |
| iShares International |
| Vanguard International |
IShares International and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and Vanguard International
The main advantage of trading using opposite IShares International and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International position performs unexpectedly, Vanguard International 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 International will offset losses from the drop in Vanguard International's long position.| IShares International vs. iShares Core High | IShares International vs. SPDR SP International | IShares International vs. iShares Select Dividend | IShares International vs. iShares Emerging Markets |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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