Correlation Between Vanguard Explorer and Champlain Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer and Champlain 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 Explorer and Champlain Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Fund and Champlain Small, you can compare the effects of market volatilities on Vanguard Explorer and Champlain 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 Explorer with a short position of Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Champlain Small.
Diversification Opportunities for Vanguard Explorer and Champlain Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Champlain is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small and Vanguard Explorer 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 Explorer Fund are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Champlain Small go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Champlain Small
Assuming the 90 days horizon Vanguard Explorer Fund is expected to generate 0.93 times more return on investment than Champlain Small. However, Vanguard Explorer Fund is 1.07 times less risky than Champlain Small. It trades about 0.07 of its potential returns per unit of risk. Champlain Small is currently generating about 0.05 per unit of risk. If you would invest 8,813 in Vanguard Explorer Fund on August 31, 2024 and sell it today you would earn a total of 3,434 from holding Vanguard Explorer Fund or generate 38.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Explorer Fund vs. Champlain Small
Performance |
| Timeline |
| Vanguard Explorer |
| Champlain Small |
Vanguard Explorer and Champlain Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and Champlain Small
The main advantage of trading using opposite Vanguard Explorer and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer position performs unexpectedly, Champlain 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 Champlain Small will offset losses from the drop in Champlain Small's long position.| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth Fund |
| Champlain Small vs. The Hartford Midcap | Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Wells Fargo Special | Champlain Small vs. Baron Emerging Markets |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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