Correlation Between Vanguard Emerging and Small Cap
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Small Cap 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 Emerging and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Emerging Markets and Small Cap Core, you can compare the effects of market volatilities on Vanguard Emerging and Small Cap 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 Emerging with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Small Cap.
Diversification Opportunities for Vanguard Emerging and Small Cap
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Small is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Vanguard Emerging 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 Emerging Markets are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Small Cap go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Small Cap
Assuming the 90 days horizon Vanguard Emerging Markets is expected to generate 0.2 times more return on investment than Small Cap. However, Vanguard Emerging Markets is 4.95 times less risky than Small Cap. It trades about 0.12 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.01 per unit of risk. If you would invest 2,157 in Vanguard Emerging Markets on November 3, 2024 and sell it today you would earn a total of 190.00 from holding Vanguard Emerging Markets or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Small Cap Core
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Small Cap Core |
Vanguard Emerging and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Small Cap
The main advantage of trading using opposite Vanguard Emerging and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Vanguard Emerging vs. The Gabelli Healthcare | Vanguard Emerging vs. Health Care Ultrasector | Vanguard Emerging vs. Live Oak Health | Vanguard Emerging vs. Tekla Healthcare Investors |
| Small Cap vs. Locorr Market Trend | Small Cap vs. Siit Emerging Markets | Small Cap vs. Eagle Mlp Strategy | Small Cap vs. Artisan Developing World |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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