Correlation Between IShares MSCI and Vanguard Utilities
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Vanguard Utilities 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 MSCI and Vanguard Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and Vanguard Utilities Index, you can compare the effects of market volatilities on IShares MSCI and Vanguard Utilities 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 MSCI with a short position of Vanguard Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Vanguard Utilities.
Diversification Opportunities for IShares MSCI and Vanguard Utilities
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Vanguard is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Vanguard Utilities Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Utilities Index and IShares MSCI 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 MSCI EAFE are associated (or correlated) with Vanguard Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Utilities Index has no effect on the direction of IShares MSCI i.e., IShares MSCI and Vanguard Utilities go up and down completely randomly.
Pair Corralation between IShares MSCI and Vanguard Utilities
Considering the 90-day investment horizon IShares MSCI is expected to generate 4.11 times less return on investment than Vanguard Utilities. But when comparing it to its historical volatility, iShares MSCI EAFE is 1.11 times less risky than Vanguard Utilities. It trades about 0.03 of its potential returns per unit of risk. Vanguard Utilities Index is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,228 in Vanguard Utilities Index on August 15, 2025 and sell it today you would earn a total of 547.00 from holding Vanguard Utilities Index or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Vanguard Utilities Index
Performance |
| Timeline |
| iShares MSCI EAFE |
| Vanguard Utilities Index |
IShares MSCI and Vanguard Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Vanguard Utilities
The main advantage of trading using opposite IShares MSCI and Vanguard Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Vanguard Utilities 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 Utilities will offset losses from the drop in Vanguard Utilities' long position.| IShares MSCI vs. iShares ESG Aware | IShares MSCI vs. iShares Core High | IShares MSCI vs. Alerian MLP ETF | IShares MSCI vs. iShares MSCI EAFE |
| Vanguard Utilities vs. Vanguard Utilities Index | Vanguard Utilities vs. Vanguard Energy Index | Vanguard Utilities vs. Vanguard Energy Index | Vanguard Utilities vs. Vanguard Consumer Staples |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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