Correlation Between Vanguard and VanEck IBoxx
Can any of the company-specific risk be diversified away by investing in both Vanguard and VanEck 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 and VanEck IBoxx 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 VanEck iBoxx EUR, you can compare the effects of market volatilities on Vanguard and VanEck 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 with a short position of VanEck IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and VanEck IBoxx.
Diversification Opportunities for Vanguard and VanEck IBoxx
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and VanEck is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and VanEck iBoxx EUR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck iBoxx EUR 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 VanEck IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck iBoxx EUR has no effect on the direction of Vanguard i.e., Vanguard and VanEck IBoxx go up and down completely randomly.
Pair Corralation between Vanguard and VanEck IBoxx
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 0.57 times more return on investment than VanEck IBoxx. However, Vanguard SP 500 is 1.77 times less risky than VanEck IBoxx. It trades about 0.16 of its potential returns per unit of risk. VanEck iBoxx EUR is currently generating about -0.02 per unit of risk. If you would invest 9,007 in Vanguard SP 500 on November 2, 2024 and sell it today you would earn a total of 1,373 from holding Vanguard SP 500 or generate 15.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.14% |
| Values | Daily Returns |
Vanguard SP 500 vs. VanEck iBoxx EUR
Performance |
| Timeline |
| Vanguard SP 500 |
| VanEck iBoxx EUR |
Vanguard and VanEck IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and VanEck IBoxx
The main advantage of trading using opposite Vanguard and VanEck IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, VanEck 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 VanEck IBoxx will offset losses from the drop in VanEck IBoxx's long position.| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
| VanEck IBoxx vs. VanEck Solana ETN | VanEck IBoxx vs. VanEck Sustainable World | VanEck IBoxx vs. VanEck Global Fallen | VanEck IBoxx vs. VanEck Oil Services |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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