Correlation Between Vanguard Canadian and IShares 1
Can any of the company-specific risk be diversified away by investing in both Vanguard Canadian and IShares 1 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 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Canadian Short and iShares 1 5 Year, you can compare the effects of market volatilities on Vanguard Canadian and IShares 1 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 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Canadian and IShares 1.
Diversification Opportunities for Vanguard Canadian and IShares 1
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Canadian Short and iShares 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 5 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 Short are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 5 has no effect on the direction of Vanguard Canadian i.e., Vanguard Canadian and IShares 1 go up and down completely randomly.
Pair Corralation between Vanguard Canadian and IShares 1
Assuming the 90 days trading horizon Vanguard Canadian Short is expected to generate 0.87 times more return on investment than IShares 1. However, Vanguard Canadian Short is 1.15 times less risky than IShares 1. It trades about 0.11 of its potential returns per unit of risk. iShares 1 5 Year is currently generating about 0.06 per unit of risk. If you would invest 2,297 in Vanguard Canadian Short on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Vanguard Canadian Short or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Canadian Short vs. iShares 1 5 Year
Performance |
| Timeline |
| Vanguard Canadian Short |
| iShares 1 5 |
Vanguard Canadian and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Canadian and IShares 1
The main advantage of trading using opposite Vanguard Canadian and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Canadian position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.| Vanguard Canadian vs. Vanguard Canadian Short Term | Vanguard Canadian vs. Vanguard Canadian Aggregate | Vanguard Canadian vs. iShares Canadian Short | Vanguard Canadian vs. Vanguard FTSE Developed |
| IShares 1 vs. iShares 1 5 Year | IShares 1 vs. iShares Premium Money | IShares 1 vs. iShares Canadian Government | IShares 1 vs. iShares Global Monthly |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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