Correlation Between Vanguard Index and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Index 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 Index 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 Index Funds and iShares Trust , you can compare the effects of market volatilities on Vanguard Index 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 Index with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Index and IShares Trust.
Diversification Opportunities for Vanguard Index and IShares Trust
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and IShares is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Index Funds and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Vanguard Index 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 Index Funds 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 Index i.e., Vanguard Index and IShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Index and IShares Trust
Assuming the 90 days trading horizon Vanguard Index Funds is expected to generate 0.68 times more return on investment than IShares Trust. However, Vanguard Index Funds is 1.46 times less risky than IShares Trust. It trades about 0.18 of its potential returns per unit of risk. iShares Trust is currently generating about 0.11 per unit of risk. If you would invest 733,744 in Vanguard Index Funds on August 25, 2024 and sell it today you would earn a total of 387,756 from holding Vanguard Index Funds or generate 52.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Index Funds vs. iShares Trust
Performance |
| Timeline |
| Vanguard Index Funds |
| iShares Trust |
Vanguard Index and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Index and IShares Trust
The main advantage of trading using opposite Vanguard Index and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Index 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 Index vs. iShares Global Timber | Vanguard Index vs. Vanguard World | Vanguard Index vs. iShares Trust | Vanguard Index vs. iShares Trust |
| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Trust |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |