Correlation Between Vanguard Russell and IShares Paris

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

By analyzing existing cross correlation between Vanguard Russell 1000 and iShares Paris Aligned Climate, you can compare the effects of market volatilities on Vanguard Russell and IShares Paris 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 Russell with a short position of IShares Paris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and IShares Paris.

Diversification Opportunities for Vanguard Russell and IShares Paris

0.9

Correlation Coefficient

Vanguard Russell  IShares Paris

Almost no diversification

The 3 months correlation between Vanguard and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and iShares Paris Aligned Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Paris Aligned and Vanguard Russell 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 Russell 1000 are associated (or correlated) with IShares Paris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Paris Aligned has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and IShares Paris go up and down completely randomly.

Pair Corralation between Vanguard Russell and IShares Paris

Given the investment horizon of 90 days Vanguard Russell 1000 is expected to generate 1.16 times more return on investment than IShares Paris. However, Vanguard Russell is 1.16 times more volatile than iShares Paris Aligned Climate. It trades about -0.04 of its potential returns per unit of risk. iShares Paris Aligned Climate is currently generating about -0.05 per unit of risk. If you would invest  10,408  in Vanguard Russell 1000 on February 1, 2025 and sell it today you would lose (714.00) from holding Vanguard Russell 1000 or give up 6.86% of portfolio value over 90 days.

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

Vanguard Russell 1000  vs.  iShares Paris Aligned Climate

Vanguard Russell 1000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vanguard Russell is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

iShares Paris Aligned

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Paris Aligned Climate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's fundamental drivers 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 Vanguard Russell and IShares Paris

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

The idea behind Vanguard Russell 1000 and iShares Paris Aligned Climate 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.