Correlation Between Vanguard Small-cap and Voya Index
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Voya Index 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 Voya Index 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 Voya Index Solution, you can compare the effects of market volatilities on Vanguard Small-cap and Voya Index 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 Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Voya Index.
Diversification Opportunities for Vanguard Small-cap and Voya Index
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Voya is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution 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 Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Voya Index go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Voya Index
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 1.0 times more return on investment than Voya Index. However, Vanguard Small Cap Value is 1.0 times less risky than Voya Index. It trades about 0.26 of its potential returns per unit of risk. Voya Index Solution is currently generating about 0.13 per unit of risk. If you would invest 4,712 in Vanguard Small Cap Value on October 20, 2024 and sell it today you would earn a total of 194.00 from holding Vanguard Small Cap Value or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Voya Index Solution
Performance |
| Timeline |
| Vanguard Small Cap |
| Voya Index Solution |
Vanguard Small-cap and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Voya Index
The main advantage of trading using opposite Vanguard Small-cap and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Voya Index 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 Voya Index will offset losses from the drop in Voya Index's long position.| Vanguard Small-cap vs. Ab Bond Inflation | Vanguard Small-cap vs. Lord Abbett Inflation | Vanguard Small-cap vs. Guggenheim Managed Futures | Vanguard Small-cap vs. Great West Inflation Protected Securities |
| Voya Index vs. Gmo High Yield | Voya Index vs. Barings High Yield | Voya Index vs. Siit High Yield | Voya Index vs. Maryland Tax Free Bond |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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