Correlation Between Vanguard Small-cap and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Growth 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 Growth 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 Index and Growth Strategy Fund, you can compare the effects of market volatilities on Vanguard Small-cap and Growth 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Growth Strategy.
Diversification Opportunities for Vanguard Small-cap and Growth Strategy
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VANGUARD and Growth is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth 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 Index are associated (or correlated) with Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Growth Strategy go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Growth Strategy
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 2.29 times more return on investment than Growth Strategy. However, Vanguard Small-cap is 2.29 times more volatile than Growth Strategy Fund. It trades about 0.19 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.05 per unit of risk. If you would invest 32,837 in Vanguard Small Cap Index on August 25, 2024 and sell it today you would earn a total of 1,701 from holding Vanguard Small Cap Index or generate 5.18% 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 Index vs. Growth Strategy Fund
Performance |
| Timeline |
| Vanguard Small Cap |
| Growth Strategy |
Vanguard Small-cap and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Growth Strategy
The main advantage of trading using opposite Vanguard Small-cap and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Growth 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.| Vanguard Small-cap vs. Vanguard Small Cap Index | Vanguard Small-cap vs. Vanguard Small Cap Index | Vanguard Small-cap vs. Vanguard Small Cap Index | Vanguard Small-cap vs. Fidelity Small Cap |
| Growth Strategy vs. Tax Managed Mid Small | Growth Strategy vs. Nationwide Small Cap | Growth Strategy vs. Vanguard Small Cap Index | Growth Strategy vs. Ancorathelen Small Mid Cap |
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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