Correlation Between Vanguard Total and IShares Bitcoin
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and IShares Bitcoin 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 Total and IShares Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and iShares Bitcoin Trust, you can compare the effects of market volatilities on Vanguard Total and IShares Bitcoin 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 Total with a short position of IShares Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and IShares Bitcoin.
Diversification Opportunities for Vanguard Total and IShares Bitcoin
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and iShares Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Bitcoin Trust and Vanguard Total 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 Total Stock are associated (or correlated) with IShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Bitcoin Trust has no effect on the direction of Vanguard Total i.e., Vanguard Total and IShares Bitcoin go up and down completely randomly.
Pair Corralation between Vanguard Total and IShares Bitcoin
Considering the 90-day investment horizon Vanguard Total is expected to generate 3.77 times less return on investment than IShares Bitcoin. But when comparing it to its historical volatility, Vanguard Total Stock is 4.67 times less risky than IShares Bitcoin. It trades about 0.13 of its potential returns per unit of risk. iShares Bitcoin Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,663 in iShares Bitcoin Trust on August 30, 2024 and sell it today you would earn a total of 2,840 from holding iShares Bitcoin Trust or generate 106.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 56.6% |
| Values | Daily Returns |
Vanguard Total Stock vs. iShares Bitcoin Trust
Performance |
| Timeline |
| Vanguard Total Stock |
| iShares Bitcoin Trust |
Vanguard Total and IShares Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and IShares Bitcoin
The main advantage of trading using opposite Vanguard Total and IShares Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, IShares Bitcoin 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 Bitcoin will offset losses from the drop in IShares Bitcoin's long position.| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
| IShares Bitcoin vs. ProShares Trust | IShares Bitcoin vs. iShares Ethereum Trust | IShares Bitcoin vs. ProShares Trust | IShares Bitcoin vs. Grayscale Ethereum 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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