Correlation Between Lsv Small and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Lsv Small and Vanguard Total 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 Lsv Small and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsv Small Cap and Vanguard Total Bond, you can compare the effects of market volatilities on Lsv Small and Vanguard Total 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 Lsv Small with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsv Small and Vanguard Total.
Diversification Opportunities for Lsv Small and Vanguard Total
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lsv and Vanguard is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond and Lsv Small 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 Lsv Small Cap are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of Lsv Small i.e., Lsv Small and Vanguard Total go up and down completely randomly.
Pair Corralation between Lsv Small and Vanguard Total
Assuming the 90 days horizon Lsv Small Cap is expected to generate 3.78 times more return on investment than Vanguard Total. However, Lsv Small is 3.78 times more volatile than Vanguard Total Bond. It trades about 0.05 of its potential returns per unit of risk. Vanguard Total Bond is currently generating about -0.04 per unit of risk. If you would invest 1,788 in Lsv Small Cap on November 3, 2024 and sell it today you would earn a total of 110.00 from holding Lsv Small Cap or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsv Small Cap vs. Vanguard Total Bond
Performance |
| Timeline |
| Lsv Small Cap |
| Vanguard Total Bond |
Lsv Small and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsv Small and Vanguard Total
The main advantage of trading using opposite Lsv Small and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsv Small position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| Lsv Small vs. Amg Timessquare Mid | Lsv Small vs. Lsv Value Equity | Lsv Small vs. Baron Discovery Fund | Lsv Small vs. Victory Sycamore Established |
| Vanguard Total vs. Blackrock Financial Institutions | Vanguard Total vs. John Hancock Financial | Vanguard Total vs. Financials Ultrasector Profund | Vanguard Total vs. Angel Oak Financial |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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