Correlation Between Vanguard Short and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Short 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 Short 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 Short Term Inflation Protected and iShares Trust, you can compare the effects of market volatilities on Vanguard Short 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 Short with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short and IShares Trust.
Diversification Opportunities for Vanguard Short and IShares Trust
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and IShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Inflation and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Vanguard Short 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 Short Term Inflation Protected 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 Short i.e., Vanguard Short and IShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Short and IShares Trust
Given the investment horizon of 90 days Vanguard Short Term Inflation Protected is expected to generate 0.3 times more return on investment than IShares Trust. However, Vanguard Short Term Inflation Protected is 3.3 times less risky than IShares Trust. It trades about 0.19 of its potential returns per unit of risk. iShares Trust is currently generating about -0.07 per unit of risk. If you would invest 4,873 in Vanguard Short Term Inflation Protected on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Vanguard Short Term Inflation Protected or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Short Term Inflation vs. iShares Trust
Performance |
| Timeline |
| Vanguard Short Term |
| iShares Trust |
Vanguard Short and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Short and IShares Trust
The main advantage of trading using opposite Vanguard Short and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short 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 Short vs. Vanguard Short Term Treasury | Vanguard Short vs. Vanguard Total International | Vanguard Short vs. Vanguard Intermediate Term Treasury | Vanguard Short vs. Vanguard Short Term Corporate |
| IShares Trust vs. Vanguard Short Term Inflation Protected | IShares Trust vs. iShares TIPS Bond | IShares Trust vs. Invesco PureBeta 0 5 | IShares Trust vs. Goldman Sachs Access |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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