Correlation Between Vanguard Small-cap and Saat Defensive
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Saat Defensive 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 Saat Defensive 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 Saat Defensive Strategy, you can compare the effects of market volatilities on Vanguard Small-cap and Saat Defensive 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 Saat Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Saat Defensive.
Diversification Opportunities for Vanguard Small-cap and Saat Defensive
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Saat is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Saat Defensive Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Defensive 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 Saat Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Defensive Strategy has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Saat Defensive go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Saat Defensive
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 32.09 times more return on investment than Saat Defensive. However, Vanguard Small-cap is 32.09 times more volatile than Saat Defensive Strategy. It trades about 0.32 of its potential returns per unit of risk. Saat Defensive Strategy is currently generating about 0.56 per unit of risk. If you would invest 4,782 in Vanguard Small Cap Value on September 3, 2024 and sell it today you would earn a total of 396.00 from holding Vanguard Small Cap Value or generate 8.28% 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. Saat Defensive Strategy
Performance |
| Timeline |
| Vanguard Small Cap |
| Saat Defensive Strategy |
Vanguard Small-cap and Saat Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Saat Defensive
The main advantage of trading using opposite Vanguard Small-cap and Saat Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Saat Defensive 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 Saat Defensive will offset losses from the drop in Saat Defensive'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 |
| Saat Defensive vs. Versatile Bond Portfolio | Saat Defensive vs. California Bond Fund | Saat Defensive vs. Ultra Short Fixed Income | Saat Defensive vs. Multisector Bond Sma |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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