Correlation Between Vanguard Small and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Vanguard Consumer 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 Vanguard Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Vanguard Consumer Staples, you can compare the effects of market volatilities on Vanguard Small and Vanguard Consumer 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 Vanguard Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Vanguard Consumer.
Diversification Opportunities for Vanguard Small and Vanguard Consumer
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Vanguard is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Vanguard Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer Staples 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 Growth are associated (or correlated) with Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer Staples has no effect on the direction of Vanguard Small i.e., Vanguard Small and Vanguard Consumer go up and down completely randomly.
Pair Corralation between Vanguard Small and Vanguard Consumer
Considering the 90-day investment horizon Vanguard Small Cap Growth is expected to generate 1.98 times more return on investment than Vanguard Consumer. However, Vanguard Small is 1.98 times more volatile than Vanguard Consumer Staples. It trades about 0.34 of its potential returns per unit of risk. Vanguard Consumer Staples is currently generating about 0.17 per unit of risk. If you would invest 27,154 in Vanguard Small Cap Growth on August 27, 2024 and sell it today you would earn a total of 2,631 from holding Vanguard Small Cap Growth or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Vanguard Consumer Staples
Performance |
| Timeline |
| Vanguard Small Cap |
| Vanguard Consumer Staples |
Vanguard Small and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Vanguard Consumer
The main advantage of trading using opposite Vanguard Small and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Vanguard Consumer 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 Vanguard Consumer will offset losses from the drop in Vanguard Consumer's long position.| Vanguard Small vs. Vanguard Mid Cap Growth | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Growth Index |
| Vanguard Consumer vs. Vanguard Consumer Discretionary | Vanguard Consumer vs. Vanguard Utilities Index | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Materials Index |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |