Correlation Between Vanguard Small-cap and Cullen Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Cullen 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 Small-cap and Cullen Small 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 Cullen Small Cap, you can compare the effects of market volatilities on Vanguard Small-cap and Cullen 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 Small-cap with a short position of Cullen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Cullen Small.
Diversification Opportunities for Vanguard Small-cap and Cullen Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Cullen is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Cullen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Small 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 Value are associated (or correlated) with Cullen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Small Cap has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Cullen Small go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Cullen Small
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 0.67 times more return on investment than Cullen Small. However, Vanguard Small Cap Value is 1.49 times less risky than Cullen Small. It trades about 0.28 of its potential returns per unit of risk. Cullen Small Cap is currently generating about 0.18 per unit of risk. If you would invest 4,766 in Vanguard Small Cap Value on August 26, 2024 and sell it today you would earn a total of 364.00 from holding Vanguard Small Cap Value or generate 7.64% 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 Value vs. Cullen Small Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Cullen Small Cap |
Vanguard Small-cap and Cullen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Cullen Small
The main advantage of trading using opposite Vanguard Small-cap and Cullen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Cullen 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 Cullen Small will offset losses from the drop in Cullen Small's long position.| Vanguard Small-cap vs. Vanguard Mid Cap Value | Vanguard Small-cap vs. Vanguard Value Index | Vanguard Small-cap vs. Vanguard Small Cap Growth | Vanguard Small-cap vs. Vanguard Emerging Markets |
| Cullen Small vs. Cullen Small Cap | Cullen Small vs. Cullen Emerging Markets | Cullen Small vs. Cullen Emerging Markets | Cullen Small vs. Cullen Enhanced Equity |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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