Correlation Between Vanguard Small-cap and Champlain Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Champlain Small 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 Champlain Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Champlain Small, you can compare the effects of market volatilities on Vanguard Small-cap and Champlain Small 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 Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Champlain Small.
Diversification Opportunities for Vanguard Small-cap and Champlain Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VANGUARD and Champlain is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small 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 Index are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Champlain Small go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Champlain Small
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.48 times less return on investment than Champlain Small. But when comparing it to its historical volatility, Vanguard Small Cap Index is 1.28 times less risky than Champlain Small. It trades about 0.29 of its potential returns per unit of risk. Champlain Small is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,312 in Champlain Small on August 28, 2024 and sell it today you would earn a total of 270.00 from holding Champlain Small or generate 11.68% 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 Index vs. Champlain Small
Performance |
| Timeline |
| Vanguard Small Cap |
| Champlain Small |
Vanguard Small-cap and Champlain Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Champlain Small
The main advantage of trading using opposite Vanguard Small-cap and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Champlain Small 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 Champlain Small will offset losses from the drop in Champlain Small's long position.| Vanguard Small-cap vs. Loomis Sayles Inflation | Vanguard Small-cap vs. Aqr Managed Futures | Vanguard Small-cap vs. Atac Inflation Rotation | Vanguard Small-cap vs. Guidepath Managed Futures |
| Champlain Small vs. Washington Mutual Investors | Champlain Small vs. Baron Emerging Markets | Champlain Small vs. Aquagold International | Champlain Small vs. Morningstar Unconstrained Allocation |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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