Correlation Between Vanguard Health and IShares Healthcare
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and IShares Healthcare 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 Health and IShares Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and iShares Healthcare Providers, you can compare the effects of market volatilities on Vanguard Health and IShares Healthcare 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 Health with a short position of IShares Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and IShares Healthcare.
Diversification Opportunities for Vanguard Health and IShares Healthcare
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and iShares Healthcare Providers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare and Vanguard Health 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 Health Care are associated (or correlated) with IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare has no effect on the direction of Vanguard Health i.e., Vanguard Health and IShares Healthcare go up and down completely randomly.
Pair Corralation between Vanguard Health and IShares Healthcare
Considering the 90-day investment horizon Vanguard Health Care is expected to generate 0.66 times more return on investment than IShares Healthcare. However, Vanguard Health Care is 1.51 times less risky than IShares Healthcare. It trades about -0.05 of its potential returns per unit of risk. iShares Healthcare Providers is currently generating about -0.08 per unit of risk. If you would invest 28,474 in Vanguard Health Care on November 2, 2024 and sell it today you would lose (1,296) from holding Vanguard Health Care or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Health Care vs. iShares Healthcare Providers
Performance |
| Timeline |
| Vanguard Health Care |
| iShares Healthcare |
Vanguard Health and IShares Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and IShares Healthcare
The main advantage of trading using opposite Vanguard Health and IShares Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, IShares Healthcare 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 Healthcare will offset losses from the drop in IShares Healthcare's long position.| Vanguard Health vs. Vanguard Consumer Staples | Vanguard Health vs. Vanguard Financials Index | Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Consumer Discretionary |
| IShares Healthcare vs. iShares Pharmaceuticals ETF | IShares Healthcare vs. iShares Medical Devices | IShares Healthcare vs. iShares Healthcare ETF | IShares Healthcare vs. iShares Broker Dealers Securities |
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 Stocks Directory module to find actively traded stocks across global markets.
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