Correlation Between Vanguard Small-cap and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Aberdeen China 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 Aberdeen China 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 Aberdeen China Oppty, you can compare the effects of market volatilities on Vanguard Small-cap and Aberdeen China 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 Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Aberdeen China.
Diversification Opportunities for Vanguard Small-cap and Aberdeen China
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Aberdeen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty 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 Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Aberdeen China go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Aberdeen China
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 0.66 times more return on investment than Aberdeen China. However, Vanguard Small Cap Value is 1.52 times less risky than Aberdeen China. It trades about 0.28 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about -0.15 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Aberdeen China Oppty
Performance |
| Timeline |
| Vanguard Small Cap |
| Aberdeen China Oppty |
Vanguard Small-cap and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Aberdeen China
The main advantage of trading using opposite Vanguard Small-cap and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Aberdeen China 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 Aberdeen China will offset losses from the drop in Aberdeen China'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 |
| Aberdeen China vs. Valic Company I | Aberdeen China vs. Amg River Road | Aberdeen China vs. Vanguard Small Cap Value | Aberdeen China vs. Pace Smallmedium Value |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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