Correlation Between Vanguard Consumer and IShares Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Consumer and IShares Global 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 Consumer and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Consumer Discretionary and iShares Global Consumer, you can compare the effects of market volatilities on Vanguard Consumer and IShares Global 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 Consumer with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Consumer and IShares Global.
Diversification Opportunities for Vanguard Consumer and IShares Global
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and IShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Discretionar and iShares Global Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Consumer and Vanguard Consumer 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 Consumer Discretionary are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Consumer has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and IShares Global go up and down completely randomly.
Pair Corralation between Vanguard Consumer and IShares Global
Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to generate 1.84 times more return on investment than IShares Global. However, Vanguard Consumer is 1.84 times more volatile than iShares Global Consumer. It trades about 0.08 of its potential returns per unit of risk. iShares Global Consumer is currently generating about 0.04 per unit of risk. If you would invest 24,305 in Vanguard Consumer Discretionary on November 19, 2024 and sell it today you would earn a total of 13,861 from holding Vanguard Consumer Discretionary or generate 57.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Consumer Discretionar vs. iShares Global Consumer
Performance |
| Timeline |
| Vanguard Consumer |
| iShares Global Consumer |
Vanguard Consumer and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Consumer and IShares Global
The main advantage of trading using opposite Vanguard Consumer and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Consumer position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| Vanguard Consumer vs. Vanguard Consumer Staples | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Communication Services | Vanguard Consumer vs. Vanguard Materials Index |
| IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Utilities | IShares Global vs. iShares Global Industrials | IShares Global vs. iShares Global Materials |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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