Correlation Between Vanguard Growth and FlexShares IBoxx

Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and FlexShares IBoxx 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 FlexShares IBoxx 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 FlexShares iBoxx 3 Year, you can compare the effects of market volatilities on Vanguard Growth and FlexShares IBoxx 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 FlexShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and FlexShares IBoxx.

Diversification Opportunities for Vanguard Growth and FlexShares IBoxx

0.1

Correlation Coefficient

Vanguard Growth  FlexShares IBoxx

Average diversification

The 3 months correlation between Vanguard and FlexShares is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and FlexShares iBoxx 3 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares iBoxx 3 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 FlexShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares iBoxx 3 has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and FlexShares IBoxx go up and down completely randomly.

Pair Corralation between Vanguard Growth and FlexShares IBoxx

Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 6.2 times more return on investment than FlexShares IBoxx. However, Vanguard Growth is 6.2 times more volatile than FlexShares iBoxx 3 Year. It trades about 0.34 of its potential returns per unit of risk. FlexShares iBoxx 3 Year is currently generating about -0.15 per unit of risk. If you would invest  37,829  in Vanguard Growth Index on March 1, 2025 and sell it today you would earn a total of  3,524  from holding Vanguard Growth Index or generate 9.32% return on investment over 90 days.

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

Vanguard Growth Index  vs.  FlexShares iBoxx 3 Year

Vanguard Growth Index

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in June 2025.

FlexShares iBoxx 3

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares iBoxx 3 Year are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FlexShares IBoxx is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vanguard Growth and FlexShares IBoxx

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

The idea behind Vanguard Growth Index and FlexShares iBoxx 3 Year 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.