Correlation Between Vanguard Small-cap and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Growth Fund 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 Growth Fund 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 Growth Fund Of, you can compare the effects of market volatilities on Vanguard Small-cap and Growth Fund 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Growth Fund.
Diversification Opportunities for Vanguard Small-cap and Growth Fund
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Growth is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Growth Fund go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Growth Fund
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.32 times less return on investment than Growth Fund. In addition to that, Vanguard Small-cap is 1.07 times more volatile than Growth Fund Of. It trades about 0.06 of its total potential returns per unit of risk. Growth Fund Of is currently generating about 0.09 per unit of volatility. If you would invest 5,240 in Growth Fund Of on September 3, 2024 and sell it today you would earn a total of 2,783 from holding Growth Fund Of or generate 53.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Growth Fund Of
Performance |
| Timeline |
| Vanguard Small Cap |
| Growth Fund |
Vanguard Small-cap and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Growth Fund
The main advantage of trading using opposite Vanguard Small-cap and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Vanguard Small-cap vs. T Rowe Price | Vanguard Small-cap vs. Fm Investments Large | Vanguard Small-cap vs. Touchstone Large Cap | Vanguard Small-cap vs. Semiconductor Ultrasector Profund |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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