Correlation Between Vanguard Small-cap and Wasatch Micro
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Wasatch Micro 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 Wasatch Micro 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 Wasatch Micro Cap, you can compare the effects of market volatilities on Vanguard Small-cap and Wasatch Micro 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 Wasatch Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Wasatch Micro.
Diversification Opportunities for Vanguard Small-cap and Wasatch Micro
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Wasatch is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Wasatch Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Micro Cap 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 Wasatch Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Micro Cap has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Wasatch Micro go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Wasatch Micro
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.05 times less return on investment than Wasatch Micro. In addition to that, Vanguard Small-cap is 1.03 times more volatile than Wasatch Micro Cap. It trades about 0.07 of its total potential returns per unit of risk. Wasatch Micro Cap is currently generating about 0.08 per unit of volatility. If you would invest 295.00 in Wasatch Micro Cap on August 28, 2024 and sell it today you would earn a total of 153.00 from holding Wasatch Micro Cap or generate 51.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Wasatch Micro Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Wasatch Micro Cap |
Vanguard Small-cap and Wasatch Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Wasatch Micro
The main advantage of trading using opposite Vanguard Small-cap and Wasatch Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Wasatch Micro 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 Wasatch Micro will offset losses from the drop in Wasatch Micro'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 |
| Wasatch Micro vs. Ips Strategic Capital | Wasatch Micro vs. Qs Growth Fund | Wasatch Micro vs. Omni Small Cap Value | Wasatch Micro vs. Qs Large 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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