Correlation Between Vanguard and IShares Global
Can any of the company-specific risk be diversified away by investing in both Vanguard and IShares Global 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 and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and iShares Global Infrastructure, you can compare the effects of market volatilities on Vanguard and IShares Global 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 with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and IShares Global.
Diversification Opportunities for Vanguard and IShares Global
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra and Vanguard 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 SP 500 are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of Vanguard i.e., Vanguard and IShares Global go up and down completely randomly.
Pair Corralation between Vanguard and IShares Global
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 1.24 times more return on investment than IShares Global. However, Vanguard is 1.24 times more volatile than iShares Global Infrastructure. It trades about 0.24 of its potential returns per unit of risk. iShares Global Infrastructure is currently generating about 0.21 per unit of risk. If you would invest 9,514 in Vanguard SP 500 on August 28, 2024 and sell it today you would earn a total of 1,327 from holding Vanguard SP 500 or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. iShares Global Infrastructure
Performance |
| Timeline |
| Vanguard SP 500 |
| iShares Global Infra |
Vanguard and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and IShares Global
The main advantage of trading using opposite Vanguard and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| Vanguard vs. SPDR Dow Jones | Vanguard vs. iShares SP 500 | Vanguard vs. iShares China CNY | Vanguard vs. iShares Core MSCI |
| IShares Global vs. SPDR Dow Jones | IShares Global vs. iShares SP 500 | IShares Global vs. iShares China CNY | IShares Global vs. iShares Core MSCI |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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