Correlation Between Vanguard Extended and IShares Core
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and IShares Core 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 Core 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 Core SP, you can compare the effects of market volatilities on Vanguard Extended and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and IShares Core.
Diversification Opportunities for Vanguard Extended and IShares Core
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and IShares Core go up and down completely randomly.
Pair Corralation between Vanguard Extended and IShares Core
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.15 times more return on investment than IShares Core. However, Vanguard Extended is 1.15 times more volatile than iShares Core SP. It trades about 0.32 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.26 per unit of risk. If you would invest 18,567 in Vanguard Extended Market on August 27, 2024 and sell it today you would earn a total of 1,775 from holding Vanguard Extended Market or generate 9.56% 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 Core SP
Performance |
| Timeline |
| Vanguard Extended Market |
| iShares Core SP |
Vanguard Extended and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and IShares Core
The main advantage of trading using opposite Vanguard Extended and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. iShares Core SP | Vanguard Extended vs. SPDR SP MIDCAP | Vanguard Extended vs. First Trust Dorsey |
| IShares Core vs. JPMorgan Fundamental Data | IShares Core vs. Vanguard Mid Cap Index | IShares Core vs. SPDR SP 400 | IShares Core vs. SPDR SP 400 |
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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