Correlation Between Vanguard Small-cap and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Sparta Capital 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 Small-cap and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Sparta Capital, you can compare the effects of market volatilities on Vanguard Small-cap and Sparta Capital 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 Small-cap with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Sparta Capital.
Diversification Opportunities for Vanguard Small-cap and Sparta Capital
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Sparta is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Vanguard Small-cap 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 Small Cap Growth are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Sparta Capital go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Sparta Capital
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 5.18 times less return on investment than Sparta Capital. But when comparing it to its historical volatility, Vanguard Small Cap Growth is 10.16 times less risky than Sparta Capital. It trades about 0.08 of its potential returns per unit of risk. Sparta Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Sparta Capital on August 28, 2024 and sell it today you would earn a total of 0.40 from holding Sparta Capital or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Sparta Capital
Performance |
| Timeline |
| Vanguard Small Cap |
| Sparta Capital |
Vanguard Small-cap and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Sparta Capital
The main advantage of trading using opposite Vanguard Small-cap and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| Vanguard Small-cap vs. Vanguard International Growth | Vanguard Small-cap vs. Vanguard Windsor Ii | Vanguard Small-cap vs. Vanguard Primecap Fund | Vanguard Small-cap vs. Vanguard Growth Fund |
| Sparta Capital vs. Copa Holdings SA | Sparta Capital vs. United Airlines Holdings | Sparta Capital vs. Delta Air Lines | Sparta Capital vs. SkyWest |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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