Correlation Between Iteris and Vanguard Total

Can any of the company-specific risk be diversified away by investing in both Iteris 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 Iteris and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iteris Inc and Vanguard Total Stock, you can compare the effects of market volatilities on Iteris 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 Iteris with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iteris and Vanguard Total.

Diversification Opportunities for Iteris and Vanguard Total

0.7

Correlation Coefficient

Iteris  Vanguard Total

Poor diversification

The 22 months correlation between Iteris and Vanguard is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Iteris Inc and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Iteris 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 Iteris Inc 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 Stock has no effect on the direction of Iteris i.e., Iteris and Vanguard Total go up and down completely randomly.

Pair Corralation between Iteris and Vanguard Total

Considering the 90-day investment horizon Iteris Inc is expected to generate 2.48 times more return on investment than Vanguard Total. However, Iteris is 2.48 times more volatile than Vanguard Total Stock. It trades about 0.04 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.06 per unit of risk. If you would invest  320.00  in Iteris Inc on March 16, 2024 and sell it today you would earn a total of  101.00  from holding Iteris Inc or generate 31.56% return on investment over 90 days.

Time Period	22 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Iteris Inc  vs.  Vanguard Total Stock

Iteris Inc

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iteris Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Iteris is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Vanguard Total Stock

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Iteris and Vanguard Total

The main advantage of trading using opposite Iteris and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iteris 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.

The idea behind Iteris Inc and Vanguard Total Stock pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.