Correlation Between Vanguard Intermediate and IShares CMBS

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

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

Diversification Opportunities for Vanguard Intermediate and IShares CMBS

0.95

Correlation Coefficient

Vanguard Intermediate  IShares CMBS

Almost no diversification

The 3 months correlation between Vanguard and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Bon and iShares CMBS ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares CMBS ETF and Vanguard Intermediate 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 Intermediate Term Bond are associated (or correlated) with IShares CMBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares CMBS ETF has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and IShares CMBS go up and down completely randomly.

Pair Corralation between Vanguard Intermediate and IShares CMBS

Considering the 90-day investment horizon Vanguard Intermediate Term Bond is expected to generate 1.25 times more return on investment than IShares CMBS. However, Vanguard Intermediate is 1.25 times more volatile than iShares CMBS ETF. It trades about 0.13 of its potential returns per unit of risk. iShares CMBS ETF is currently generating about 0.1 per unit of risk. If you would invest  7,542  in Vanguard Intermediate Term Bond on May 6, 2025 and sell it today you would earn a total of  199.00  from holding Vanguard Intermediate Term Bond or generate 2.64% return on investment over 90 days.

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

Vanguard Intermediate Term Bon  vs.  iShares CMBS ETF

Vanguard Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Bond are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares CMBS ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares CMBS ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, IShares CMBS 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 Intermediate and IShares CMBS

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

The idea behind Vanguard Intermediate Term Bond and iShares CMBS ETF 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 Commodity Directory module to find actively traded commodities issued by global exchanges.