Correlation Between Vanguard and Themes Small
Can any of the company-specific risk be diversified away by investing in both Vanguard and Themes 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 and Themes Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP Small Cap and Themes Small Cap, you can compare the effects of market volatilities on Vanguard and Themes 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 with a short position of Themes Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Themes Small.
Diversification Opportunities for Vanguard and Themes Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Themes is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Small Cap and Themes Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Small Cap and Vanguard 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 SP Small Cap are associated (or correlated) with Themes Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Small Cap has no effect on the direction of Vanguard i.e., Vanguard and Themes Small go up and down completely randomly.
Pair Corralation between Vanguard and Themes Small
Given the investment horizon of 90 days Vanguard is expected to generate 65.06 times less return on investment than Themes Small. But when comparing it to its historical volatility, Vanguard SP Small Cap is 53.01 times less risky than Themes Small. It trades about 0.05 of its potential returns per unit of risk. Themes Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Themes Small Cap on August 26, 2024 and sell it today you would earn a total of 3,421 from holding Themes Small Cap or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 48.49% |
| Values | Daily Returns |
Vanguard SP Small Cap vs. Themes Small Cap
Performance |
| Timeline |
| Vanguard SP Small |
| Themes Small Cap |
Vanguard and Themes Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Themes Small
The main advantage of trading using opposite Vanguard and Themes Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Themes 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 Themes Small will offset losses from the drop in Themes Small's long position.| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard Russell 2000 | Vanguard vs. Vanguard SP Small Cap |
| Themes Small vs. Dimensional ETF Trust | Themes Small vs. Vanguard Small Cap Index | Themes Small vs. First Trust Multi Manager | Themes Small vs. Vanguard SP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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