Correlation Between Vanguard Small-cap and Auer Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Auer Growth 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 Auer Growth 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 Auer Growth Fund, you can compare the effects of market volatilities on Vanguard Small-cap and Auer Growth 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 Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Auer Growth.
Diversification Opportunities for Vanguard Small-cap and Auer Growth
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Auer is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund 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 Value are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Auer Growth go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Auer Growth
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 1.27 times more return on investment than Auer Growth. However, Vanguard Small-cap is 1.27 times more volatile than Auer Growth Fund. It trades about 0.2 of its potential returns per unit of risk. Auer Growth Fund is currently generating about 0.1 per unit of risk. If you would invest 4,795 in Vanguard Small Cap Value on August 24, 2024 and sell it today you would earn a total of 266.00 from holding Vanguard Small Cap Value or generate 5.55% 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. Auer Growth Fund
Performance |
| Timeline |
| Vanguard Small Cap |
| Auer Growth Fund |
Vanguard Small-cap and Auer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Auer Growth
The main advantage of trading using opposite Vanguard Small-cap and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Auer Growth 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 Auer Growth will offset losses from the drop in Auer Growth's long position.| Vanguard Small-cap vs. Dunham High Yield | Vanguard Small-cap vs. Artisan High Income | Vanguard Small-cap vs. American Century High | Vanguard Small-cap vs. Jpmorgan High Yield |
| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Oberweis Small Cap Opportunities | Auer Growth vs. Aegis Value Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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