Correlation Between Vanguard Intermediate and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and IShares Trust 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 Intermediate and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Corporate and iShares Trust, you can compare the effects of market volatilities on Vanguard Intermediate and IShares Trust 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 Intermediate with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and IShares Trust.
Diversification Opportunities for Vanguard Intermediate and IShares Trust
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vanguard and IShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Cor and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Vanguard Intermediate 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 Intermediate Term Corporate are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and IShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and IShares Trust
Given the investment horizon of 90 days Vanguard Intermediate is expected to generate 1508.9 times less return on investment than IShares Trust. But when comparing it to its historical volatility, Vanguard Intermediate Term Corporate is 757.43 times less risky than IShares Trust. It trades about 0.12 of its potential returns per unit of risk. iShares Trust is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.00 in iShares Trust on September 1, 2024 and sell it today you would earn a total of 2,509 from holding iShares Trust or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 13.49% |
| Values | Daily Returns |
Vanguard Intermediate Term Cor vs. iShares Trust
Performance |
| Timeline |
| Vanguard Intermediate |
| iShares Trust |
Vanguard Intermediate and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate and IShares Trust
The main advantage of trading using opposite Vanguard Intermediate and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.The idea behind Vanguard Intermediate Term Corporate and iShares Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| IShares Trust vs. Vanguard Total Stock | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Core SP | IShares Trust vs. Vanguard Total Bond |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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