Correlation Between Vanguard Small and Themes Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Themes 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 Themes 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 Themes Small Cap, you can compare the effects of market volatilities on Vanguard Small and Themes 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 Themes Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Themes Small.
Diversification Opportunities for Vanguard Small and Themes Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Themes is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Themes Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes 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 Themes Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Small Cap has no effect on the direction of Vanguard Small i.e., Vanguard Small and Themes Small go up and down completely randomly.
Pair Corralation between Vanguard Small and Themes Small
Allowing for the 90-day total investment horizon Vanguard Small is expected to generate 1.3 times less return on investment than Themes Small. But when comparing it to its historical volatility, Vanguard Small Cap Index is 1.19 times less risky than Themes Small. It trades about 0.3 of its potential returns per unit of risk. Themes Small Cap is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,061 in Themes Small Cap on August 30, 2024 and sell it today you would earn a total of 348.00 from holding Themes Small Cap or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Themes Small Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Themes Small Cap |
Vanguard Small and Themes Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Themes Small
The main advantage of trading using opposite Vanguard Small and Themes Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Themes 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 Themes Small will offset losses from the drop in Themes 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 |
| Themes Small vs. Dimensional ETF Trust | Themes Small vs. Vanguard Small Cap Index | Themes Small vs. First Trust Multi Manager | Themes 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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