Correlation Between Vanguard Extended and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and IShares Convertible 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 Extended and IShares Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and iShares Convertible Bond, you can compare the effects of market volatilities on Vanguard Extended and IShares Convertible 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 Extended with a short position of IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and IShares Convertible.
Diversification Opportunities for Vanguard Extended and IShares Convertible
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond and Vanguard Extended 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 Extended Market are associated (or correlated) with IShares Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and IShares Convertible go up and down completely randomly.
Pair Corralation between Vanguard Extended and IShares Convertible
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 2.15 times more return on investment than IShares Convertible. However, Vanguard Extended is 2.15 times more volatile than iShares Convertible Bond. It trades about 0.08 of its potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.1 per unit of risk. If you would invest 13,268 in Vanguard Extended Market on August 30, 2024 and sell it today you would earn a total of 7,186 from holding Vanguard Extended Market or generate 54.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. iShares Convertible Bond
Performance |
| Timeline |
| Vanguard Extended Market |
| iShares Convertible Bond |
Vanguard Extended and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and IShares Convertible
The main advantage of trading using opposite Vanguard Extended and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, IShares Convertible 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 Convertible will offset losses from the drop in IShares Convertible's long position.| Vanguard Extended vs. Vanguard Large Cap Index | Vanguard Extended vs. Vanguard Small Cap Growth | Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Mid Cap Growth |
| IShares Convertible vs. VanEck Vectors Moodys | IShares Convertible vs. BondBloxx ETF Trust | IShares Convertible vs. Vanguard ESG Corporate | IShares Convertible vs. Vanguard Intermediate Term Corporate |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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