Correlation Between IShares Core and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both IShares Core and Vanguard Total 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 IShares Core and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Total and Vanguard Total Bond, you can compare the effects of market volatilities on IShares Core and Vanguard Total 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 IShares Core with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Vanguard Total.
Diversification Opportunities for IShares Core and Vanguard Total
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond and IShares Core 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 iShares Core Total are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of IShares Core i.e., IShares Core and Vanguard Total go up and down completely randomly.
Pair Corralation between IShares Core and Vanguard Total
Given the investment horizon of 90 days iShares Core Total is expected to generate 0.98 times more return on investment than Vanguard Total. However, iShares Core Total is 1.02 times less risky than Vanguard Total. It trades about -0.2 of its potential returns per unit of risk. Vanguard Total Bond is currently generating about -0.2 per unit of risk. If you would invest 4,531 in iShares Core Total on January 25, 2024 and sell it today you would lose (74.00) from holding iShares Core Total or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Total vs. Vanguard Total Bond
Performance |
| Timeline |
| iShares Core Total |
| Vanguard Total Bond |
IShares Core and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Vanguard Total
The main advantage of trading using opposite IShares Core and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| IShares Core vs. SPDR Blackstone Senior | IShares Core vs. SPDR Barclays Intermediate | IShares Core vs. SPDR Bloomberg Investment | IShares Core vs. iShares Ultra Short Term |
| Vanguard Total vs. VictoryShares USAA Core | Vanguard Total vs. VictoryShares International Value | Vanguard Total vs. VictoryShares Small Mid | Vanguard Total vs. VictoryShares Value Momentum |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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