Correlation Between IShares Core and Vanguard Retirement

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

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

Diversification Opportunities for IShares Core and Vanguard Retirement

0.94

Correlation Coefficient

IShares Core  Vanguard Retirement

Almost no diversification

The 3 months correlation between IShares and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Income and Vanguard Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Retirement and IShares Core 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 iShares Core Income are associated (or correlated) with Vanguard Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Retirement has no effect on the direction of IShares Core i.e., IShares Core and Vanguard Retirement go up and down completely randomly.

Pair Corralation between IShares Core and Vanguard Retirement

Assuming the 90 days trading horizon IShares Core is expected to generate 1.71 times less return on investment than Vanguard Retirement. In addition to that, IShares Core is 1.12 times more volatile than Vanguard Retirement Income. It trades about 0.14 of its total potential returns per unit of risk. Vanguard Retirement Income is currently generating about 0.26 per unit of volatility. If you would invest  2,455  in Vanguard Retirement Income on April 24, 2025 and sell it today you would earn a total of  101.00  from holding Vanguard Retirement Income or generate 4.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

iShares Core Income  vs.  Vanguard Retirement Income

iShares Core Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vanguard Retirement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Retirement Income are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard Retirement is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Vanguard Retirement

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

The idea behind iShares Core Income and Vanguard Retirement Income 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.