Correlation Between Vanguard ESG and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both Vanguard ESG and IShares Convertible 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 Vanguard ESG and IShares Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard ESG Corporate and iShares Convertible Bond, you can compare the effects of market volatilities on Vanguard ESG and IShares Convertible 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 Vanguard ESG with a short position of IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard ESG and IShares Convertible.
Diversification Opportunities for Vanguard ESG and IShares Convertible
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and IShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard ESG Corporate and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond and Vanguard ESG 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 Vanguard ESG Corporate are associated (or correlated) with IShares Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of Vanguard ESG i.e., Vanguard ESG and IShares Convertible go up and down completely randomly.
Pair Corralation between Vanguard ESG and IShares Convertible
Given the investment horizon of 90 days Vanguard ESG is expected to generate 3.2 times less return on investment than IShares Convertible. But when comparing it to its historical volatility, Vanguard ESG Corporate is 1.59 times less risky than IShares Convertible. It trades about 0.1 of its potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 7,759 in iShares Convertible Bond on September 1, 2024 and sell it today you would earn a total of 1,169 from holding iShares Convertible Bond or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard ESG Corporate vs. iShares Convertible Bond
Performance |
| Timeline |
| Vanguard ESG Corporate |
| iShares Convertible Bond |
Vanguard ESG and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard ESG and IShares Convertible
The main advantage of trading using opposite Vanguard ESG and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard ESG position performs unexpectedly, IShares Convertible 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 IShares Convertible will offset losses from the drop in IShares Convertible's long position.| Vanguard ESG vs. Vanguard ESG International | Vanguard ESG vs. Vanguard ESG Stock | Vanguard ESG vs. Vanguard Total Corporate | Vanguard ESG vs. Vanguard Ultra Short Bond |
| IShares Convertible vs. VanEck Vectors Moodys | IShares Convertible vs. BondBloxx ETF Trust | IShares Convertible vs. Vanguard ESG Corporate | IShares Convertible vs. Vanguard Intermediate Term Corporate |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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