Correlation Between Vanguard Short and FlexShares IBoxx
Can any of the company-specific risk be diversified away by investing in both Vanguard Short and FlexShares IBoxx 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 FlexShares IBoxx 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 FlexShares iBoxx 5 Year, you can compare the effects of market volatilities on Vanguard Short and FlexShares IBoxx 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 FlexShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short and FlexShares IBoxx.
Diversification Opportunities for Vanguard Short and FlexShares IBoxx
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and FlexShares is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Inflation and FlexShares iBoxx 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares iBoxx 5 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 FlexShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares iBoxx 5 has no effect on the direction of Vanguard Short i.e., Vanguard Short and FlexShares IBoxx go up and down completely randomly.
Pair Corralation between Vanguard Short and FlexShares IBoxx
Given the investment horizon of 90 days Vanguard Short Term Inflation Protected is expected to generate 0.44 times more return on investment than FlexShares IBoxx. However, Vanguard Short Term Inflation Protected is 2.28 times less risky than FlexShares IBoxx. It trades about 0.16 of its potential returns per unit of risk. FlexShares iBoxx 5 Year is currently generating about -0.01 per unit of risk. If you would invest 4,799 in Vanguard Short Term Inflation Protected on November 2, 2024 and sell it today you would earn a total of 83.00 from holding Vanguard Short Term Inflation Protected or generate 1.73% 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. FlexShares iBoxx 5 Year
Performance |
| Timeline |
| Vanguard Short Term |
| FlexShares iBoxx 5 |
Vanguard Short and FlexShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Short and FlexShares IBoxx
The main advantage of trading using opposite Vanguard Short and FlexShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short position performs unexpectedly, FlexShares IBoxx 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 FlexShares IBoxx will offset losses from the drop in FlexShares IBoxx'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 |
| FlexShares IBoxx vs. Vanguard Short Term Inflation Protected | FlexShares IBoxx vs. iShares TIPS Bond | FlexShares IBoxx vs. Invesco PureBeta 0 5 | FlexShares IBoxx 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |