Correlation Between Guggenheim Mid and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Guggenheim Mid and Vanguard Small-cap 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 Guggenheim Mid and Vanguard Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Mid Cap and Vanguard Small Cap Value, you can compare the effects of market volatilities on Guggenheim Mid and Vanguard Small-cap 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 Guggenheim Mid with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Mid and Vanguard Small-cap.
Diversification Opportunities for Guggenheim Mid and Vanguard Small-cap
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Guggenheim and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Mid Cap and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Guggenheim Mid 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 Guggenheim Mid Cap are associated (or correlated) with Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Guggenheim Mid i.e., Guggenheim Mid and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Guggenheim Mid and Vanguard Small-cap
Assuming the 90 days horizon Guggenheim Mid is expected to generate 1.37 times less return on investment than Vanguard Small-cap. But when comparing it to its historical volatility, Guggenheim Mid Cap is 1.05 times less risky than Vanguard Small-cap. It trades about 0.2 of its potential returns per unit of risk. Vanguard Small Cap Value is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,825 in Vanguard Small Cap Value on August 29, 2024 and sell it today you would earn a total of 354.00 from holding Vanguard Small Cap Value or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Mid Cap vs. Vanguard Small Cap Value
Performance |
| Timeline |
| Guggenheim Mid Cap |
| Vanguard Small Cap |
Guggenheim Mid and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Mid and Vanguard Small-cap
The main advantage of trading using opposite Guggenheim Mid and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Mid position performs unexpectedly, Vanguard Small-cap 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 Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| Guggenheim Mid vs. Dws Government Money | Guggenheim Mid vs. Counterpoint Tactical Municipal | Guggenheim Mid vs. Franklin High Yield | Guggenheim Mid vs. The National Tax Free |
| Vanguard Small-cap vs. Small Cap Stock | Vanguard Small-cap vs. Ips Strategic Capital | Vanguard Small-cap vs. Ab Global Risk | Vanguard Small-cap vs. Volumetric Fund Volumetric |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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