Correlation Between Schwab Small-cap and Vy Baron
Can any of the company-specific risk be diversified away by investing in both Schwab Small-cap and Vy Baron 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 Schwab Small-cap and Vy Baron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Small Cap Index and Vy Baron Growth, you can compare the effects of market volatilities on Schwab Small-cap and Vy Baron 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 Schwab Small-cap with a short position of Vy Baron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Small-cap and Vy Baron.
Diversification Opportunities for Schwab Small-cap and Vy Baron
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Schwab and IBSSX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Small Cap Index and Vy Baron Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Baron Growth and Schwab 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 Schwab Small Cap Index are associated (or correlated) with Vy Baron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Baron Growth has no effect on the direction of Schwab Small-cap i.e., Schwab Small-cap and Vy Baron go up and down completely randomly.
Pair Corralation between Schwab Small-cap and Vy Baron
Assuming the 90 days horizon Schwab Small Cap Index is expected to generate 1.22 times more return on investment than Vy Baron. However, Schwab Small-cap is 1.22 times more volatile than Vy Baron Growth. It trades about 0.11 of its potential returns per unit of risk. Vy Baron Growth is currently generating about 0.07 per unit of risk. If you would invest 3,617 in Schwab Small Cap Index on October 25, 2024 and sell it today you would earn a total of 74.00 from holding Schwab Small Cap Index or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Small Cap Index vs. Vy Baron Growth
Performance |
| Timeline |
| Schwab Small Cap |
| Vy Baron Growth |
Schwab Small-cap and Vy Baron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Small-cap and Vy Baron
The main advantage of trading using opposite Schwab Small-cap and Vy Baron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Small-cap position performs unexpectedly, Vy Baron 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 Vy Baron will offset losses from the drop in Vy Baron's long position.| Schwab Small-cap vs. Vanguard Small Cap Index | Schwab Small-cap vs. Vanguard Small Cap Index | Schwab Small-cap vs. Vanguard Small Cap Index | Schwab Small-cap vs. Vanguard Small Cap Index |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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