Correlation Between Vanguard Canadian and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian 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 Canadian 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 Canadian Government and iShares Convertible Bond, you can compare the effects of market volatilities on Vanguard Canadian 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 Canadian with a short position of IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and IShares Convertible.
Diversification Opportunities for Vanguard Canadian and IShares Convertible
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and IShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Government 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 Canadian 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 Canadian Government 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 Canadian i.e., Vanguard Canadian and IShares Convertible go up and down completely randomly.
Pair Corralation between Vanguard Canadian and IShares Convertible
Assuming the 90 days trading horizon Vanguard Canadian is expected to generate 1.77 times less return on investment than IShares Convertible. But when comparing it to its historical volatility, Vanguard Canadian Government is 1.23 times less risky than IShares Convertible. It trades about 0.07 of its potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,576 in iShares Convertible Bond on September 1, 2024 and sell it today you would earn a total of 157.00 from holding iShares Convertible Bond or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Vanguard Canadian Government vs. iShares Convertible Bond
Performance |
| Timeline |
| Vanguard Canadian |
| iShares Convertible Bond |
Vanguard Canadian and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and IShares Convertible
The main advantage of trading using opposite Vanguard Canadian and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian 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 Canadian vs. BetaPro Gold Bullion | Vanguard Canadian vs. BetaPro SP TSX | Vanguard Canadian vs. BetaPro SPTSX Capped | Vanguard Canadian vs. Global X Active |
| IShares Convertible vs. iShares 1 10Yr Laddered | IShares Convertible vs. CI Canadian Convertible | IShares Convertible vs. iShares Floating Rate | IShares Convertible vs. iShares JP Morgan |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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