Correlation Between Wealthsimple Shariah and Vanguard Short-term

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

By analyzing existing cross correlation between Wealthsimple Shariah World and Vanguard Short Term Investment Grade, you can compare the effects of market volatilities on Wealthsimple Shariah and Vanguard Short-term 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 Wealthsimple Shariah with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wealthsimple Shariah and Vanguard Short-term.

Diversification Opportunities for Wealthsimple Shariah and Vanguard Short-term

0.56

Correlation Coefficient

Wealthsimple Shariah  Vanguard Short-term

Very weak diversification

The 3 months correlation between Wealthsimple and VANGUARD is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wealthsimple Shariah World and Vanguard Short Term Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Wealthsimple Shariah 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 Wealthsimple Shariah World are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Wealthsimple Shariah i.e., Wealthsimple Shariah and Vanguard Short-term go up and down completely randomly.

Pair Corralation between Wealthsimple Shariah and Vanguard Short-term

Assuming the 90 days trading horizon Wealthsimple Shariah is expected to generate 1.1 times less return on investment than Vanguard Short-term. In addition to that, Wealthsimple Shariah is 5.57 times more volatile than Vanguard Short Term Investment Grade. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Short Term Investment Grade is currently generating about 0.17 per unit of volatility. If you would invest  1,038  in Vanguard Short Term Investment Grade on August 26, 2025 and sell it today you would earn a total of  14.00  from holding Vanguard Short Term Investment Grade or generate 1.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Wealthsimple Shariah World  vs.  Vanguard Short Term Investment

Wealthsimple Shariah

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wealthsimple Shariah World are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Wealthsimple Shariah is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Vanguard Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Investment Grade are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wealthsimple Shariah and Vanguard Short-term

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

The idea behind Wealthsimple Shariah World and Vanguard Short Term Investment Grade 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.