Correlation Between Vanguard Industrials and IShares North

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

By analyzing existing cross correlation between Vanguard Industrials Index and iShares North American, you can compare the effects of market volatilities on Vanguard Industrials and IShares North 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 Industrials with a short position of IShares North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Industrials and IShares North.

Diversification Opportunities for Vanguard Industrials and IShares North

0.0

Correlation Coefficient

Vanguard Industrials  IShares North

Pay attention - limited upside

The 3 months correlation between Vanguard and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Industrials Index and iShares North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares North American and Vanguard Industrials 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 Industrials Index are associated (or correlated) with IShares North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares North American has no effect on the direction of Vanguard Industrials i.e., Vanguard Industrials and IShares North go up and down completely randomly.

Pair Corralation between Vanguard Industrials and IShares North

If you would invest  23,536  in Vanguard Industrials Index on February 15, 2024 and sell it today you would earn a total of  704.00  from holding Vanguard Industrials Index or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard Industrials Index  vs.  iShares North American

Vanguard Industrials

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Industrials Index are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal forward indicators, Vanguard Industrials may actually be approaching a critical reversion point that can send shares even higher in June 2024.

iShares North American

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days iShares North American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, IShares North is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Industrials and IShares North

The main advantage of trading using opposite Vanguard Industrials and IShares North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Industrials position performs unexpectedly, IShares North 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 North will offset losses from the drop in IShares North's long position.

The idea behind Vanguard Industrials Index and iShares North American 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.