Correlation Between Vanguard Consumer and IShares Self

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

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

Diversification Opportunities for Vanguard Consumer and IShares Self

-0.3

Correlation Coefficient

Vanguard Consumer  IShares Self

Very good diversification

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

Pair Corralation between Vanguard Consumer and IShares Self

Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to under-perform the IShares Self. In addition to that, Vanguard Consumer is 1.05 times more volatile than iShares Self Driving EV. It trades about -0.01 of its total potential returns per unit of risk. iShares Self Driving EV is currently generating about 0.07 per unit of volatility. If you would invest  2,917  in iShares Self Driving EV on October 5, 2024 and sell it today you would earn a total of  60.00  from holding iShares Self Driving EV or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vanguard Consumer Discretionar  vs.  iShares Self Driving EV

Vanguard Consumer

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Consumer Discretionary are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Vanguard Consumer reported solid returns over the last few months and may actually be approaching a breakup point.

iShares Self Driving

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Self Driving EV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Vanguard Consumer and IShares Self

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

The idea behind Vanguard Consumer Discretionary and iShares Self Driving EV 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.