Correlation Between Vanguard Small-cap and Guggenheim High
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Guggenheim High 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 Guggenheim High 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 Guggenheim High Yield, you can compare the effects of market volatilities on Vanguard Small-cap and Guggenheim High 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 Guggenheim High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Guggenheim High.
Diversification Opportunities for Vanguard Small-cap and Guggenheim High
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and GUGGENHEIM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Guggenheim High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim High Yield 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 Guggenheim High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim High Yield has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Guggenheim High go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Guggenheim High
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 4.33 times more return on investment than Guggenheim High. However, Vanguard Small-cap is 4.33 times more volatile than Guggenheim High Yield. It trades about 0.07 of its potential returns per unit of risk. Guggenheim High Yield is currently generating about 0.12 per unit of risk. If you would invest 24,921 in Vanguard Small Cap Index on September 5, 2024 and sell it today you would earn a total of 11,022 from holding Vanguard Small Cap Index or generate 44.23% 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. Guggenheim High Yield
Performance |
| Timeline |
| Vanguard Small Cap |
| Guggenheim High Yield |
Vanguard Small-cap and Guggenheim High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Guggenheim High
The main advantage of trading using opposite Vanguard Small-cap and Guggenheim High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Guggenheim High 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 Guggenheim High will offset losses from the drop in Guggenheim High's long position.| Vanguard Small-cap vs. Guggenheim High Yield | Vanguard Small-cap vs. Ab High Income | Vanguard Small-cap vs. Ab Global Risk | Vanguard Small-cap vs. Needham Aggressive Growth |
| Guggenheim High vs. Auer Growth Fund | Guggenheim High vs. Balanced Fund Investor | Guggenheim High vs. T Rowe Price | Guggenheim High vs. Rbb Fund |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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