Correlation Between IShares Trust and Vanguard International
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 Trust 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 Trust and Vanguard International Equity, you can compare the effects of market volatilities on IShares Trust 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 Trust with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Vanguard International.
Diversification Opportunities for IShares Trust and Vanguard International
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Vanguard is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Vanguard International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and IShares Trust 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 Trust 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 Trust i.e., IShares Trust and Vanguard International go up and down completely randomly.
Pair Corralation between IShares Trust and Vanguard International
Assuming the 90 days trading horizon iShares Trust is expected to generate 1.58 times more return on investment than Vanguard International. However, IShares Trust is 1.58 times more volatile than Vanguard International Equity. It trades about 0.07 of its potential returns per unit of risk. Vanguard International Equity is currently generating about -0.04 per unit of risk. If you would invest 241,700 in iShares Trust on August 25, 2024 and sell it today you would earn a total of 4,708 from holding iShares Trust or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Vanguard International Equity
Performance |
| Timeline |
| iShares Trust |
| Vanguard International |
IShares Trust and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Vanguard International
The main advantage of trading using opposite IShares Trust and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Trust |
| Vanguard International vs. iShares Core MSCI | Vanguard International vs. The Select Sector | Vanguard International vs. Promotora y Operadora | Vanguard International vs. iShares Global Timber |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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