Correlation Between Vanguard Small and Innovator Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Innovator Small 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 Innovator Small 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 Innovator Small Cap, you can compare the effects of market volatilities on Vanguard Small and Innovator Small 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 Innovator Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Innovator Small.
Diversification Opportunities for Vanguard Small and Innovator Small
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Innovator is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Innovator Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Small Cap 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 Innovator Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Small Cap has no effect on the direction of Vanguard Small i.e., Vanguard Small and Innovator Small go up and down completely randomly.
Pair Corralation between Vanguard Small and Innovator Small
Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to generate 1.85 times more return on investment than Innovator Small. However, Vanguard Small is 1.85 times more volatile than Innovator Small Cap. It trades about 0.05 of its potential returns per unit of risk. Innovator Small Cap is currently generating about 0.03 per unit of risk. If you would invest 21,842 in Vanguard Small Cap Index on November 28, 2024 and sell it today you would earn a total of 1,977 from holding Vanguard Small Cap Index or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.12% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Innovator Small Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Innovator Small Cap |
Vanguard Small and Innovator Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Innovator Small
The main advantage of trading using opposite Vanguard Small and Innovator Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Innovator Small 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 Innovator Small will offset losses from the drop in Innovator Small'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 |
| Innovator Small vs. Dimensional ETF Trust | Innovator Small vs. Vanguard Small Cap Index | Innovator Small vs. First Trust Multi Manager | Innovator Small vs. Vanguard SP Small Cap |
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.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |