Correlation Between Vanguard Small-cap and Voya Vacs
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Voya Vacs 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 Small-cap and Voya Vacs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Voya Vacs Index, you can compare the effects of market volatilities on Vanguard Small-cap and Voya Vacs 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 Small-cap with a short position of Voya Vacs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Voya Vacs.
Diversification Opportunities for Vanguard Small-cap and Voya Vacs
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Voya is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Voya Vacs Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Vacs Index and Vanguard Small-cap 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 Small Cap Index are associated (or correlated) with Voya Vacs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Vacs Index has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Voya Vacs go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Voya Vacs
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.08 times less return on investment than Voya Vacs. But when comparing it to its historical volatility, Vanguard Small Cap Index is 1.38 times less risky than Voya Vacs. It trades about 0.37 of its potential returns per unit of risk. Voya Vacs Index is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,179 in Voya Vacs Index on September 4, 2024 and sell it today you would earn a total of 116.00 from holding Voya Vacs Index or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Voya Vacs Index
Performance |
| Timeline |
| Vanguard Small Cap |
| Voya Vacs Index |
Vanguard Small-cap and Voya Vacs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Voya Vacs
The main advantage of trading using opposite Vanguard Small-cap and Voya Vacs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Voya Vacs 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 Voya Vacs will offset losses from the drop in Voya Vacs' long position.| Vanguard Small-cap vs. Vanguard Mid Cap Index | Vanguard Small-cap vs. Vanguard Reit Index | Vanguard Small-cap vs. Vanguard Value Index | Vanguard Small-cap vs. Vanguard Small Cap Value |
| Voya Vacs vs. Voya Bond Index | Voya Vacs vs. Voya Bond Index | Voya Vacs vs. Voya Limited Maturity | Voya Vacs vs. Voya Limited Maturity |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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