Correlation Between IShares 25 and Vanguard Long

Can any of the company-specific risk be diversified away by investing in both IShares 25 and Vanguard Long 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 25 and Vanguard Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 25 Year and Vanguard Long Term Treasury, you can compare the effects of market volatilities on IShares 25 and Vanguard Long 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 25 with a short position of Vanguard Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 25 and Vanguard Long.

Diversification Opportunities for IShares 25 and Vanguard Long

0.99

Correlation Coefficient

IShares 25  Vanguard Long

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 25 Year and Vanguard Long Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term and IShares 25 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 25 Year are associated (or correlated) with Vanguard Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of IShares 25 i.e., IShares 25 and Vanguard Long go up and down completely randomly.

Pair Corralation between IShares 25 and Vanguard Long

Given the investment horizon of 90 days iShares 25 Year is expected to under-perform the Vanguard Long. In addition to that, IShares 25 is 1.68 times more volatile than Vanguard Long Term Treasury. It trades about -0.01 of its total potential returns per unit of risk. Vanguard Long Term Treasury is currently generating about 0.0 per unit of volatility. If you would invest  5,840  in Vanguard Long Term Treasury on September 21, 2024 and sell it today you would lose (243.00) from holding Vanguard Long Term Treasury or give up 4.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

iShares 25 Year  vs.  Vanguard Long Term Treasury

iShares 25 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 25 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Vanguard Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Long Term Treasury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares 25 and Vanguard Long

The main advantage of trading using opposite IShares 25 and Vanguard Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 25 position performs unexpectedly, Vanguard Long 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 Long will offset losses from the drop in Vanguard Long's long position.

The idea behind iShares 25 Year and Vanguard Long Term Treasury 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.