Correlation Between Vanguard Small and Aama Income
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Aama Income 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 and Aama Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Aama Income Fund, you can compare the effects of market volatilities on Vanguard Small and Aama Income 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 with a short position of Aama Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Aama Income.
Diversification Opportunities for Vanguard Small and Aama Income
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Aama is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Aama Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aama Income Fund and Vanguard Small 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 Value are associated (or correlated) with Aama Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aama Income Fund has no effect on the direction of Vanguard Small i.e., Vanguard Small and Aama Income go up and down completely randomly.
Pair Corralation between Vanguard Small and Aama Income
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 11.87 times more return on investment than Aama Income. However, Vanguard Small is 11.87 times more volatile than Aama Income Fund. It trades about 0.07 of its potential returns per unit of risk. Aama Income Fund is currently generating about 0.17 per unit of risk. If you would invest 4,250 in Vanguard Small Cap Value on September 14, 2024 and sell it today you would earn a total of 786.00 from holding Vanguard Small Cap Value or generate 18.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Aama Income Fund
Performance |
| Timeline |
| Vanguard Small Cap |
| Aama Income Fund |
Vanguard Small and Aama Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Aama Income
The main advantage of trading using opposite Vanguard Small and Aama Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Aama Income 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 Aama Income will offset losses from the drop in Aama Income's long position.| Vanguard Small vs. Sentinel Small Pany | Vanguard Small vs. Pimco Diversified Income | Vanguard Small vs. Lord Abbett Diversified | Vanguard Small vs. Huber Capital Diversified |
| Aama Income vs. Commonwealth Global Fund | Aama Income vs. Ab Global Risk | Aama Income vs. 361 Global Longshort | Aama Income vs. Siit Global Managed |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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