Correlation Between Vanguard Value and IShares International

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

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

Diversification Opportunities for Vanguard Value and IShares International

0.89

Correlation Coefficient

Vanguard Value  IShares International

Very poor diversification

The 3 months correlation between Vanguard and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Factor and iShares International Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International and Vanguard Value 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 Value Factor are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of Vanguard Value i.e., Vanguard Value and IShares International go up and down completely randomly.

Pair Corralation between Vanguard Value and IShares International

Given the investment horizon of 90 days Vanguard Value is expected to generate 2.77 times less return on investment than IShares International. In addition to that, Vanguard Value is 1.34 times more volatile than iShares International Developed. It trades about 0.03 of its total potential returns per unit of risk. iShares International Developed is currently generating about 0.09 per unit of volatility. If you would invest  3,357  in iShares International Developed on May 6, 2025 and sell it today you would earn a total of  885.00  from holding iShares International Developed or generate 26.36% return on investment over 90 days.

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

Vanguard Value Factor  vs.  iShares International Develope

Vanguard Value Factor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Factor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vanguard Value may actually be approaching a critical reversion point that can send shares even higher in September 2025.

iShares International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares International Developed are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, IShares International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vanguard Value and IShares International

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

The idea behind Vanguard Value Factor and iShares International Developed 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..