Correlation Between IShares Medical and Vanguard Health
Can any of the company-specific risk be diversified away by investing in both IShares Medical and Vanguard Health 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 Medical and Vanguard Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Medical Devices and Vanguard Health Care, you can compare the effects of market volatilities on IShares Medical and Vanguard Health 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 Medical with a short position of Vanguard Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Medical and Vanguard Health.
Diversification Opportunities for IShares Medical and Vanguard Health
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Vanguard is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Medical Devices and Vanguard Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Health Care and IShares Medical 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 Medical Devices are associated (or correlated) with Vanguard Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Health Care has no effect on the direction of IShares Medical i.e., IShares Medical and Vanguard Health go up and down completely randomly.
Pair Corralation between IShares Medical and Vanguard Health
Considering the 90-day investment horizon iShares Medical Devices is expected to generate 1.28 times more return on investment than Vanguard Health. However, IShares Medical is 1.28 times more volatile than Vanguard Health Care. It trades about 0.09 of its potential returns per unit of risk. Vanguard Health Care is currently generating about 0.07 per unit of risk. If you would invest 4,990 in iShares Medical Devices on August 26, 2024 and sell it today you would earn a total of 1,045 from holding iShares Medical Devices or generate 20.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Medical Devices vs. Vanguard Health Care
Performance |
| Timeline |
| iShares Medical Devices |
| Vanguard Health Care |
IShares Medical and Vanguard Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Medical and Vanguard Health
The main advantage of trading using opposite IShares Medical and Vanguard Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Medical position performs unexpectedly, Vanguard Health 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 Health will offset losses from the drop in Vanguard Health's long position.| IShares Medical vs. iShares Healthcare Providers | IShares Medical vs. iShares Expanded Tech Software | IShares Medical vs. iShares Aerospace Defense | IShares Medical vs. iShares Pharmaceuticals ETF |
| Vanguard Health vs. Vanguard Consumer Staples | Vanguard Health vs. Vanguard Financials Index | Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Consumer Discretionary |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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