Correlation Between Vanguard Small-cap and Global Fixed
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Global Fixed 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 Global Fixed 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 Global Fixed Income, you can compare the effects of market volatilities on Vanguard Small-cap and Global Fixed 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 Global Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Global Fixed.
Diversification Opportunities for Vanguard Small-cap and Global Fixed
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and Global is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Global Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fixed Income 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 Global Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fixed Income has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Global Fixed go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Global Fixed
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 5.45 times more return on investment than Global Fixed. However, Vanguard Small-cap is 5.45 times more volatile than Global Fixed Income. It trades about 0.07 of its potential returns per unit of risk. Global Fixed Income is currently generating about 0.14 per unit of risk. If you would invest 3,739 in Vanguard Small Cap Value on August 28, 2024 and sell it today you would earn a total of 1,468 from holding Vanguard Small Cap Value or generate 39.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Global Fixed Income
Performance |
| Timeline |
| Vanguard Small Cap |
| Global Fixed Income |
Vanguard Small-cap and Global Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Global Fixed
The main advantage of trading using opposite Vanguard Small-cap and Global Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Global Fixed 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 Global Fixed will offset losses from the drop in Global Fixed's long position.| Vanguard Small-cap vs. Royce Global Financial | Vanguard Small-cap vs. Goldman Sachs Financial | Vanguard Small-cap vs. Davis Financial Fund | Vanguard Small-cap vs. Blackrock Financial Institutions |
| Global Fixed vs. Emerging Markets Equity | Global Fixed vs. Global E Portfolio | Global Fixed vs. Global E Portfolio | Global Fixed vs. Global Centrated Portfolio |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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