Correlation Between Smallcap Growth and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Vanguard Extended 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 Smallcap Growth and Vanguard Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Vanguard Extended Market, you can compare the effects of market volatilities on Smallcap Growth and Vanguard Extended 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 Smallcap Growth with a short position of Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Vanguard Extended.
Diversification Opportunities for Smallcap Growth and Vanguard Extended
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Vanguard Extended go up and down completely randomly.
Pair Corralation between Smallcap Growth and Vanguard Extended
Assuming the 90 days horizon Smallcap Growth is expected to generate 1.29 times less return on investment than Vanguard Extended. In addition to that, Smallcap Growth is 1.12 times more volatile than Vanguard Extended Market. It trades about 0.22 of its total potential returns per unit of risk. Vanguard Extended Market is currently generating about 0.31 per unit of volatility. If you would invest 22,655 in Vanguard Extended Market on August 30, 2024 and sell it today you would earn a total of 2,266 from holding Vanguard Extended Market or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Vanguard Extended Market
Performance |
| Timeline |
| Smallcap Growth |
| Vanguard Extended Market |
Smallcap Growth and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Vanguard Extended
The main advantage of trading using opposite Smallcap Growth and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Vanguard Extended 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 Extended will offset losses from the drop in Vanguard Extended's long position.| Smallcap Growth vs. Dreyfusstandish Global Fixed | Smallcap Growth vs. The Hartford Equity | Smallcap Growth vs. Rbc Ultra Short Fixed | Smallcap Growth vs. Small Cap Equity |
| Vanguard Extended vs. The Gabelli Small | Vanguard Extended vs. Delaware Limited Term Diversified | Vanguard Extended vs. Tax Managed Mid Small | Vanguard Extended vs. Sentinel Small Pany |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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