Correlation Between Vanguard Russell and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Russell 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 Russell 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 Russell 1000 and iShares Trust, you can compare the effects of market volatilities on Vanguard Russell 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 Russell with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and IShares Trust.
Diversification Opportunities for Vanguard Russell and IShares Trust
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Vanguard Russell 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 Russell 1000 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 Russell i.e., Vanguard Russell and IShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Russell and IShares Trust
Given the investment horizon of 90 days Vanguard Russell 1000 is expected to generate 1.41 times more return on investment than IShares Trust. However, Vanguard Russell is 1.41 times more volatile than iShares Trust. It trades about 0.13 of its potential returns per unit of risk. iShares Trust is currently generating about 0.15 per unit of risk. If you would invest 5,462 in Vanguard Russell 1000 on September 13, 2024 and sell it today you would earn a total of 5,069 from holding Vanguard Russell 1000 or generate 92.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 58.7% |
| Values | Daily Returns |
Vanguard Russell 1000 vs. iShares Trust
Performance |
| Timeline |
| Vanguard Russell 1000 |
| iShares Trust |
Vanguard Russell and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Russell and IShares Trust
The main advantage of trading using opposite Vanguard Russell and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell 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.| Vanguard Russell vs. Vanguard Russell 1000 | Vanguard Russell vs. Vanguard Russell 2000 | Vanguard Russell vs. Vanguard Mega Cap | Vanguard Russell vs. Vanguard Russell 1000 |
| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. EA Series Trust | IShares Trust vs. Aptus Defined Risk |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |