Correlation Between Vanguard Growth and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth 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 Growth 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 Growth Index and iShares Trust , you can compare the effects of market volatilities on Vanguard Growth 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 Growth with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and IShares Trust.
Diversification Opportunities for Vanguard Growth and IShares Trust
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Vanguard Growth 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 Growth Index 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 Growth i.e., Vanguard Growth and IShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Growth and IShares Trust
Considering the 90-day investment horizon Vanguard Growth is expected to generate 1.1 times less return on investment than IShares Trust. In addition to that, Vanguard Growth is 1.02 times more volatile than iShares Trust . It trades about 0.17 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.19 per unit of volatility. If you would invest 4,178 in iShares Trust on August 24, 2024 and sell it today you would earn a total of 190.00 from holding iShares Trust or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. iShares Trust
Performance |
| Timeline |
| Vanguard Growth Index |
| iShares Trust |
Vanguard Growth and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and IShares Trust
The main advantage of trading using opposite Vanguard Growth and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth 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 Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| IShares Trust vs. Vanguard Russell 1000 | IShares Trust vs. Vanguard Russell 2000 | IShares Trust vs. Vanguard Mega Cap | IShares Trust vs. Vanguard Russell 1000 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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