Correlation Between Vanguard Small and ETF Series
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and ETF Series 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 ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and ETF Series Solutions, you can compare the effects of market volatilities on Vanguard Small and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and ETF Series.
Diversification Opportunities for Vanguard Small and ETF Series
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and ETF is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 Value are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Vanguard Small i.e., Vanguard Small and ETF Series go up and down completely randomly.
Pair Corralation between Vanguard Small and ETF Series
Considering the 90-day investment horizon Vanguard Small Cap Value is expected to generate 1.23 times more return on investment than ETF Series. However, Vanguard Small is 1.23 times more volatile than ETF Series Solutions. It trades about 0.09 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.11 per unit of risk. If you would invest 14,910 in Vanguard Small Cap Value on August 30, 2024 and sell it today you would earn a total of 6,672 from holding Vanguard Small Cap Value or generate 44.75% 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 Value vs. ETF Series Solutions
Performance |
| Timeline |
| Vanguard Small Cap |
| ETF Series Solutions |
Vanguard Small and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and ETF Series
The main advantage of trading using opposite Vanguard Small and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Small Cap Growth | Vanguard Small vs. Vanguard Value Index | Vanguard Small vs. Vanguard Small Cap Index |
| ETF Series vs. AAM Low Duration | ETF Series vs. 6 Meridian Low | ETF Series vs. Exchange Listed Funds | ETF Series vs. 6 Meridian Mega |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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