Correlation Between Vanguard Growth and IShares IBoxx
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and IShares 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 Growth and IShares IBoxx 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 iBoxx High, you can compare the effects of market volatilities on Vanguard Growth and IShares 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 Growth with a short position of IShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and IShares IBoxx.
Diversification Opportunities for Vanguard Growth and IShares IBoxx
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and iShares iBoxx High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBoxx High 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 IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBoxx High has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and IShares IBoxx go up and down completely randomly.
Pair Corralation between Vanguard Growth and IShares IBoxx
Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 4.48 times more return on investment than IShares IBoxx. However, Vanguard Growth is 4.48 times more volatile than iShares iBoxx High. It trades about 0.14 of its potential returns per unit of risk. iShares iBoxx High is currently generating about 0.05 per unit of risk. If you would invest 38,393 in Vanguard Growth Index on August 30, 2024 and sell it today you would earn a total of 2,179 from holding Vanguard Growth Index or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. iShares iBoxx High
Performance |
| Timeline |
| Vanguard Growth Index |
| iShares iBoxx High |
Vanguard Growth and IShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and IShares IBoxx
The main advantage of trading using opposite Vanguard Growth and IShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, IShares 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 IShares IBoxx will offset losses from the drop in IShares IBoxx'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 IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. SPDR Bloomberg High | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 20 Year |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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