Correlation Between Vanguard 500 and Jackson Square
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Jackson Square 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 Jackson Square 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 Jackson Square Smid Cap, you can compare the effects of market volatilities on Vanguard 500 and Jackson Square 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 Jackson Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Jackson Square.
Diversification Opportunities for Vanguard 500 and Jackson Square
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Jackson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Jackson Square Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Smid 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 Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Smid has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Jackson Square go up and down completely randomly.
Pair Corralation between Vanguard 500 and Jackson Square
Assuming the 90 days horizon Vanguard 500 is expected to generate 1.61 times less return on investment than Jackson Square. But when comparing it to its historical volatility, Vanguard 500 Index is 2.01 times less risky than Jackson Square. It trades about 0.37 of its potential returns per unit of risk. Jackson Square Smid Cap is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,829 in Jackson Square Smid Cap on September 4, 2024 and sell it today you would earn a total of 177.00 from holding Jackson Square Smid Cap or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vanguard 500 Index vs. Jackson Square Smid Cap
Performance |
| Timeline |
| Vanguard 500 Index |
| Jackson Square Smid |
Vanguard 500 and Jackson Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Jackson Square
The main advantage of trading using opposite Vanguard 500 and Jackson Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Jackson Square 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 Jackson Square will offset losses from the drop in Jackson Square'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 |
| Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Virtus Kar Small Cap | Jackson Square vs. William Blair Small Mid | Jackson Square vs. Conestoga 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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