Correlation Between Vanguard Total and IShares Asia
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and IShares Asia 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 Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Market and iShares Asia 50, you can compare the effects of market volatilities on Vanguard Total and IShares Asia 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 Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and IShares Asia.
Diversification Opportunities for Vanguard Total and IShares Asia
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and IShares is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Market and iShares Asia 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia 50 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 Market are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia 50 has no effect on the direction of Vanguard Total i.e., Vanguard Total and IShares Asia go up and down completely randomly.
Pair Corralation between Vanguard Total and IShares Asia
Assuming the 90 days trading horizon Vanguard Total Market is expected to generate 0.52 times more return on investment than IShares Asia. However, Vanguard Total Market is 1.93 times less risky than IShares Asia. It trades about 0.21 of its potential returns per unit of risk. iShares Asia 50 is currently generating about 0.11 per unit of risk. If you would invest 46,880 in Vanguard Total Market on November 2, 2024 and sell it today you would earn a total of 1,253 from holding Vanguard Total Market or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Market vs. iShares Asia 50
Performance |
| Timeline |
| Vanguard Total Market |
| iShares Asia 50 |
Vanguard Total and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and IShares Asia
The main advantage of trading using opposite Vanguard Total and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, IShares Asia 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 Asia will offset losses from the drop in IShares Asia's long position.| Vanguard Total vs. Betashares Asia Technology | Vanguard Total vs. CD Private Equity | Vanguard Total vs. BetaShares Australia 200 | Vanguard Total vs. Australian High Interest |
| IShares Asia vs. iShares MSCI Emerging | IShares Asia vs. iShares Global Aggregate | IShares Asia vs. iShares CoreSP MidCap | IShares Asia vs. iShares SP 500 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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