Correlation Between Vanguard Small-cap and Nationwide Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Nationwide 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 Nationwide 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 Nationwide Small Cap, you can compare the effects of market volatilities on Vanguard Small-cap and Nationwide 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 Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Nationwide Small.
Diversification Opportunities for Vanguard Small-cap and Nationwide Small
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Nationwide is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap 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 Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Nationwide Small go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Nationwide Small
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.87 times more return on investment than Nationwide Small. However, Vanguard Small Cap Index is 1.15 times less risky than Nationwide Small. It trades about 0.07 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.05 per unit of risk. If you would invest 25,527 in Vanguard Small Cap Index on September 4, 2024 and sell it today you would earn a total of 10,478 from holding Vanguard Small Cap Index or generate 41.05% 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. Nationwide Small Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Nationwide Small Cap |
Vanguard Small-cap and Nationwide Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Nationwide Small
The main advantage of trading using opposite Vanguard Small-cap and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Nationwide 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 Nationwide Small will offset losses from the drop in Nationwide Small's long position.| Vanguard Small-cap vs. John Hancock Funds | Vanguard Small-cap vs. Legg Mason Partners | Vanguard Small-cap vs. T Rowe Price | Vanguard Small-cap vs. T Rowe Price |
| Nationwide Small vs. Putnam Convertible Incm Gwth | Nationwide Small vs. Fidelity Sai Convertible | Nationwide Small vs. Advent Claymore Convertible | Nationwide Small vs. Gabelli Convertible And |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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