Correlation Between Vanguard Extended and IShares

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

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

Diversification Opportunities for Vanguard Extended and IShares

0.0

Correlation Coefficient

Vanguard Extended  IShares

Pay attention - limited upside

The 3 months correlation between Vanguard and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and Vanguard Extended 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 Extended Market are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and IShares go up and down completely randomly.

Pair Corralation between Vanguard Extended and IShares

If you would invest  17,904  in Vanguard Extended Market on August 30, 2024 and sell it today you would earn a total of  2,550  from holding Vanguard Extended Market or generate 14.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard Extended Market  vs.  IShares

Vanguard Extended Market

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Extended Market are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Extended reported solid returns over the last few months and may actually be approaching a breakup point.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, IShares is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard Extended and IShares

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

The idea behind Vanguard Extended Market and IShares 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.