Correlation Between Vanguard Growth and IShares MSCI

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

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

Diversification Opportunities for Vanguard Growth and IShares MSCI

-0.62

Correlation Coefficient

Vanguard Growth  IShares MSCI

Excellent diversification

The 3 months correlation between Vanguard and IShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and iShares MSCI Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Philippines and Vanguard Growth 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 Growth Index are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Philippines has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and IShares MSCI go up and down completely randomly.

Pair Corralation between Vanguard Growth and IShares MSCI

Considering the 90-day investment horizon Vanguard Growth Index is expected to under-perform the IShares MSCI. In addition to that, Vanguard Growth is 1.23 times more volatile than iShares MSCI Philippines. It trades about -0.09 of its total potential returns per unit of risk. iShares MSCI Philippines is currently generating about 0.01 per unit of volatility. If you would invest  2,498  in iShares MSCI Philippines on December 29, 2024 and sell it today you would earn a total of  0.00  from holding iShares MSCI Philippines or generate 0.0% return on investment over 90 days.

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

Vanguard Growth Index  vs.  iShares MSCI Philippines

Vanguard Growth Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Growth Index has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

iShares MSCI Philippines

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vanguard Growth and IShares MSCI

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

The idea behind Vanguard Growth Index and iShares MSCI Philippines 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.