Correlation Between Vanguard Total and Ishares Russell

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Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Ishares Russell 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 Total and Ishares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total International and Ishares Russell 2000, you can compare the effects of market volatilities on Vanguard Total and Ishares Russell 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 Total with a short position of Ishares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Ishares Russell.

Diversification Opportunities for Vanguard Total and Ishares Russell

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Vanguard and Ishares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and IShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Russell 2000 and Vanguard Total 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 Total International are associated (or correlated) with Ishares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Russell 2000 has no effect on the direction of Vanguard Total i.e., Vanguard Total and Ishares Russell go up and down completely randomly.

Pair Corralation between Vanguard Total and Ishares Russell

Given the investment horizon of 90 days Vanguard Total is expected to generate 1.27 times less return on investment than Ishares Russell. But when comparing it to its historical volatility, Vanguard Total International is 1.45 times less risky than Ishares Russell. It trades about 0.02 of its potential returns per unit of risk. Ishares Russell 2000 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,195  in Ishares Russell 2000 on December 29, 2023 and sell it today you would earn a total of  194.00  from holding Ishares Russell 2000 or generate 8.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Vanguard Total International  vs.  IShares Russell 2000

 Performance 
       Timeline  
Vanguard Total Inter 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Ishares Russell 2000 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Russell 2000 are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ishares Russell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total and Ishares Russell Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Total and Ishares Russell

The main advantage of trading using opposite Vanguard Total and Ishares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Ishares Russell 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 Russell will offset losses from the drop in Ishares Russell's long position.
The idea behind Vanguard Total International and Ishares Russell 2000 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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