Correlation Between Vanguard STAR and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard STAR and IShares Trust 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 STAR and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard STAR Funds and iShares Trust , you can compare the effects of market volatilities on Vanguard STAR and IShares Trust 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 STAR with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard STAR and IShares Trust.
Diversification Opportunities for Vanguard STAR and IShares Trust
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vanguard and IShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard STAR Funds and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Vanguard STAR 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 STAR Funds are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Vanguard STAR i.e., Vanguard STAR and IShares Trust go up and down completely randomly.
Pair Corralation between Vanguard STAR and IShares Trust
Assuming the 90 days trading horizon Vanguard STAR Funds is expected to generate 0.59 times more return on investment than IShares Trust. However, Vanguard STAR Funds is 1.68 times less risky than IShares Trust. It trades about 0.05 of its potential returns per unit of risk. iShares Trust is currently generating about 0.01 per unit of risk. If you would invest 99,733 in Vanguard STAR Funds on September 5, 2024 and sell it today you would earn a total of 27,252 from holding Vanguard STAR Funds or generate 27.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vanguard STAR Funds vs. iShares Trust
Performance |
| Timeline |
| Vanguard STAR Funds |
| iShares Trust |
Vanguard STAR and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard STAR and IShares Trust
The main advantage of trading using opposite Vanguard STAR and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard STAR position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| Vanguard STAR vs. Vanguard Funds Public | Vanguard STAR vs. Vanguard Specialized Funds | Vanguard STAR vs. Vanguard World | Vanguard STAR vs. Vanguard Index Funds |
| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Trust |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |