Correlation Between Vanguard Small-cap and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Old Westbury 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 Old Westbury 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 Old Westbury Large, you can compare the effects of market volatilities on Vanguard Small-cap and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Old Westbury.
Diversification Opportunities for Vanguard Small-cap and Old Westbury
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Old is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Old Westbury go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Old Westbury
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 0.72 times more return on investment than Old Westbury. However, Vanguard Small Cap Value is 1.39 times less risky than Old Westbury. It trades about -0.28 of its potential returns per unit of risk. Old Westbury Large is currently generating about -0.24 per unit of risk. If you would invest 5,050 in Vanguard Small Cap Value on October 11, 2024 and sell it today you would lose (291.00) from holding Vanguard Small Cap Value or give up 5.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Old Westbury Large
Performance |
| Timeline |
| Vanguard Small Cap |
| Old Westbury Large |
Vanguard Small-cap and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Old Westbury
The main advantage of trading using opposite Vanguard Small-cap and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Vanguard Small-cap vs. Lord Abbett Diversified | Vanguard Small-cap vs. Saat Market Growth | Vanguard Small-cap vs. Oshaughnessy Market Leaders | Vanguard Small-cap vs. Alphacentric Hedged Market |
| Old Westbury vs. Heartland Value Plus | Old Westbury vs. Vanguard Small Cap Value | Old Westbury vs. Fpa Queens Road | Old Westbury vs. Great West Loomis Sayles |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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