Correlation Between IShares Global and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both IShares Global and Vanguard Consumer 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 Global and Vanguard Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Financials and Vanguard Consumer Discretionary, you can compare the effects of market volatilities on IShares Global and Vanguard Consumer 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 Global with a short position of Vanguard Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Vanguard Consumer.
Diversification Opportunities for IShares Global and Vanguard Consumer
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Financials and Vanguard Consumer Discretionar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer and IShares Global 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 Global Financials are associated (or correlated) with Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer has no effect on the direction of IShares Global i.e., IShares Global and Vanguard Consumer go up and down completely randomly.
Pair Corralation between IShares Global and Vanguard Consumer
Considering the 90-day investment horizon IShares Global is expected to generate 1.19 times less return on investment than Vanguard Consumer. But when comparing it to its historical volatility, iShares Global Financials is 1.36 times less risky than Vanguard Consumer. It trades about 0.1 of its potential returns per unit of risk. Vanguard Consumer Discretionary is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 23,057 in Vanguard Consumer Discretionary on August 27, 2024 and sell it today you would earn a total of 13,793 from holding Vanguard Consumer Discretionary or generate 59.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Financials vs. Vanguard Consumer Discretionar
Performance |
| Timeline |
| iShares Global Financials |
| Vanguard Consumer |
IShares Global and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and Vanguard Consumer
The main advantage of trading using opposite IShares Global and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, Vanguard Consumer 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 Consumer will offset losses from the drop in Vanguard Consumer's long position.| IShares Global vs. UBS AG London | IShares Global vs. UBS AG London | IShares Global vs. ETRACS Quarterly Pay | IShares Global vs. ETRACS 2xMonthly Pay |
| Vanguard Consumer vs. Vanguard Consumer Staples | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Communication Services | Vanguard Consumer vs. Vanguard Materials Index |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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