Correlation Between Vanguard Small and Schwab International
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Schwab International 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 Schwab International 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 Schwab International Small Cap, you can compare the effects of market volatilities on Vanguard Small and Schwab International 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 Schwab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Schwab International.
Diversification Opportunities for Vanguard Small and Schwab International
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Schwab is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Schwab International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab International 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 Schwab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab International has no effect on the direction of Vanguard Small i.e., Vanguard Small and Schwab International go up and down completely randomly.
Pair Corralation between Vanguard Small and Schwab International
Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to generate 1.41 times more return on investment than Schwab International. However, Vanguard Small is 1.41 times more volatile than Schwab International Small Cap. It trades about 0.4 of its potential returns per unit of risk. Schwab International Small Cap is currently generating about 0.04 per unit of risk. If you would invest 23,564 in Vanguard Small Cap Index on September 1, 2024 and sell it today you would earn a total of 2,487 from holding Vanguard Small Cap Index or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Schwab International Small Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Schwab International |
Vanguard Small and Schwab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Schwab International
The main advantage of trading using opposite Vanguard Small and Schwab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Schwab International 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 Schwab International will offset losses from the drop in Schwab International'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 |
| Schwab International vs. Vanguard Global ex US | Schwab International vs. Vanguard FTSE All World | Schwab International vs. Vanguard Small Cap Value | Schwab International vs. Vanguard FTSE Pacific |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |