Correlation Between Vanguard Australian and ISharesGlobal 100

Can any of the company-specific risk be diversified away by investing in both Vanguard Australian and ISharesGlobal 100 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 Australian and ISharesGlobal 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Australian Fixed and iSharesGlobal 100, you can compare the effects of market volatilities on Vanguard Australian and ISharesGlobal 100 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 Australian with a short position of ISharesGlobal 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Australian and ISharesGlobal 100.

Diversification Opportunities for Vanguard Australian and ISharesGlobal 100

0.3

Correlation Coefficient

Vanguard Australian  ISharesGlobal 100

Weak diversification

The 3 months correlation between Vanguard and ISharesGlobal is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Australian Fixed and iSharesGlobal 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSharesGlobal 100 and Vanguard Australian 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 Australian Fixed are associated (or correlated) with ISharesGlobal 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSharesGlobal 100 has no effect on the direction of Vanguard Australian i.e., Vanguard Australian and ISharesGlobal 100 go up and down completely randomly.

Pair Corralation between Vanguard Australian and ISharesGlobal 100

Assuming the 90 days trading horizon Vanguard Australian Fixed is expected to under-perform the ISharesGlobal 100. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Australian Fixed is 2.8 times less risky than ISharesGlobal 100. The etf trades about -0.12 of its potential returns per unit of risk. The iSharesGlobal 100 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  15,830  in iSharesGlobal 100 on October 9, 2024 and sell it today you would earn a total of  400.00  from holding iSharesGlobal 100 or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vanguard Australian Fixed  vs.  iSharesGlobal 100

Vanguard Australian Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Australian Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Vanguard Australian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iSharesGlobal 100

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iSharesGlobal 100 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ISharesGlobal 100 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard Australian and ISharesGlobal 100

The main advantage of trading using opposite Vanguard Australian and ISharesGlobal 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Australian position performs unexpectedly, ISharesGlobal 100 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 ISharesGlobal 100 will offset losses from the drop in ISharesGlobal 100's long position.

The idea behind Vanguard Australian Fixed and iSharesGlobal 100 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.