Correlation Between Vanguard Extended and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Cambiar Smid 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 Extended and Cambiar Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Cambiar Smid Fund, you can compare the effects of market volatilities on Vanguard Extended and Cambiar Smid 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 Extended with a short position of Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Cambiar Smid.
Diversification Opportunities for Vanguard Extended and Cambiar Smid
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Cambiar is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid and Vanguard Extended 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 Extended Market are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Cambiar Smid go up and down completely randomly.
Pair Corralation between Vanguard Extended and Cambiar Smid
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.43 times more return on investment than Cambiar Smid. However, Vanguard Extended is 1.43 times more volatile than Cambiar Smid Fund. It trades about 0.14 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.09 per unit of risk. If you would invest 12,735 in Vanguard Extended Market on September 1, 2024 and sell it today you would earn a total of 2,822 from holding Vanguard Extended Market or generate 22.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Cambiar Smid Fund
Performance |
| Timeline |
| Vanguard Extended Market |
| Cambiar Smid |
Vanguard Extended and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Cambiar Smid
The main advantage of trading using opposite Vanguard Extended and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid's long position.| Vanguard Extended vs. Vanguard Small Cap Index | Vanguard Extended vs. Vanguard Institutional Index | Vanguard Extended vs. Vanguard Total Bond | Vanguard Extended vs. Vanguard Total International |
| Cambiar Smid vs. Cambiar International Equity | Cambiar Smid vs. Cambiar Small Cap | Cambiar Smid vs. Cambiar Opportunity Fund | Cambiar Smid vs. Cambiar 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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