Correlation Between Vanguard Small and Barrons 400
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Barrons 400 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 and Barrons 400 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 Barrons 400 ETF, you can compare the effects of market volatilities on Vanguard Small and Barrons 400 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 with a short position of Barrons 400. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Barrons 400.
Diversification Opportunities for Vanguard Small and Barrons 400
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Barrons is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Barrons 400 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrons 400 ETF and Vanguard 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 Vanguard Small Cap Index are associated (or correlated) with Barrons 400. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrons 400 ETF has no effect on the direction of Vanguard Small i.e., Vanguard Small and Barrons 400 go up and down completely randomly.
Pair Corralation between Vanguard Small and Barrons 400
Allowing for the 90-day total investment horizon Vanguard Small is expected to generate 1.02 times less return on investment than Barrons 400. In addition to that, Vanguard Small is 1.04 times more volatile than Barrons 400 ETF. It trades about 0.13 of its total potential returns per unit of risk. Barrons 400 ETF is currently generating about 0.14 per unit of volatility. If you would invest 6,624 in Barrons 400 ETF on September 1, 2024 and sell it today you would earn a total of 1,297 from holding Barrons 400 ETF or generate 19.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Barrons 400 ETF
Performance |
| Timeline |
| Vanguard Small Cap |
| Barrons 400 ETF |
Vanguard Small and Barrons 400 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Barrons 400
The main advantage of trading using opposite Vanguard Small and Barrons 400 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Barrons 400 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 Barrons 400 will offset losses from the drop in Barrons 400's long position.| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
| Barrons 400 vs. iShares Small Cap | Barrons 400 vs. Invesco ESG NASDAQ | Barrons 400 vs. Invesco ESG NASDAQ | Barrons 400 vs. BlackRock Carbon Transition |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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