Correlation Between Vanguard Small-cap and Balanced Strategy
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Balanced Strategy 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 Balanced Strategy 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 Balanced Strategy Fund, you can compare the effects of market volatilities on Vanguard Small-cap and Balanced Strategy 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 Balanced Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Balanced Strategy.
Diversification Opportunities for Vanguard Small-cap and Balanced Strategy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Balanced is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Balanced Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Strategy 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 Balanced Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Strategy has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Balanced Strategy go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Balanced Strategy
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 2.72 times more return on investment than Balanced Strategy. However, Vanguard Small-cap is 2.72 times more volatile than Balanced Strategy Fund. It trades about 0.26 of its potential returns per unit of risk. Balanced Strategy Fund is currently generating about 0.14 per unit of risk. If you would invest 4,825 in Vanguard Small Cap Value on August 29, 2024 and sell it today you would earn a total of 354.00 from holding Vanguard Small Cap Value or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Balanced Strategy Fund
Performance |
| Timeline |
| Vanguard Small Cap |
| Balanced Strategy |
Vanguard Small-cap and Balanced Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Balanced Strategy
The main advantage of trading using opposite Vanguard Small-cap and Balanced Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Balanced Strategy 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 Balanced Strategy will offset losses from the drop in Balanced Strategy's long position.| Vanguard Small-cap vs. Small Cap Stock | Vanguard Small-cap vs. Ips Strategic Capital | Vanguard Small-cap vs. Ab Global Risk | Vanguard Small-cap vs. Volumetric Fund Volumetric |
| Balanced Strategy vs. Gmo Global Equity | Balanced Strategy vs. Artisan Select Equity | Balanced Strategy vs. Balanced Fund Retail | Balanced Strategy vs. Touchstone International 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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