Correlation Between Vanguard 500 and Cambiar Small
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Cambiar 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 500 and Cambiar Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Cambiar Small Cap, you can compare the effects of market volatilities on Vanguard 500 and Cambiar 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 500 with a short position of Cambiar Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Cambiar Small.
Diversification Opportunities for Vanguard 500 and Cambiar Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Cambiar is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Cambiar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Small Cap and Vanguard 500 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 500 Index are associated (or correlated) with Cambiar Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Small Cap has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Cambiar Small go up and down completely randomly.
Pair Corralation between Vanguard 500 and Cambiar Small
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.77 times more return on investment than Cambiar Small. However, Vanguard 500 Index is 1.29 times less risky than Cambiar Small. It trades about 0.11 of its potential returns per unit of risk. Cambiar Small Cap is currently generating about 0.05 per unit of risk. If you would invest 35,405 in Vanguard 500 Index on August 30, 2024 and sell it today you would earn a total of 19,947 from holding Vanguard 500 Index or generate 56.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Cambiar Small Cap
Performance |
| Timeline |
| Vanguard 500 Index |
| Cambiar Small Cap |
Vanguard 500 and Cambiar Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Cambiar Small
The main advantage of trading using opposite Vanguard 500 and Cambiar Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Cambiar 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 Cambiar Small will offset losses from the drop in Cambiar Small's long position.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Windsor Ii | Vanguard 500 vs. Vanguard Small Cap Index |
| Cambiar Small vs. Jpmorgan Dynamic Small | Cambiar Small vs. Cambiar Opportunity Fund | Cambiar Small vs. Virtus Emerging Markets | Cambiar Small vs. Cambiar International Equity |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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