Correlation Between Vanguard Small-cap and Amg Southernsun
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Amg Southernsun 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 Amg Southernsun 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 Amg Southernsun Small, you can compare the effects of market volatilities on Vanguard Small-cap and Amg Southernsun 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 Amg Southernsun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Amg Southernsun.
Diversification Opportunities for Vanguard Small-cap and Amg Southernsun
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VANGUARD and Amg is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Amg Southernsun Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Southernsun 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 Amg Southernsun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Southernsun Small has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Amg Southernsun go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Amg Southernsun
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.79 times more return on investment than Amg Southernsun. However, Vanguard Small Cap Index is 1.27 times less risky than Amg Southernsun. It trades about 0.06 of its potential returns per unit of risk. Amg Southernsun Small is currently generating about 0.0 per unit of risk. If you would invest 25,618 in Vanguard Small Cap Index on August 24, 2024 and sell it today you would earn a total of 8,920 from holding Vanguard Small Cap Index or generate 34.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Amg Southernsun Small
Performance |
| Timeline |
| Vanguard Small Cap |
| Amg Southernsun Small |
Vanguard Small-cap and Amg Southernsun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Amg Southernsun
The main advantage of trading using opposite Vanguard Small-cap and Amg Southernsun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Amg Southernsun 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 Amg Southernsun will offset losses from the drop in Amg Southernsun'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 |
| Amg Southernsun vs. Vanguard Small Cap Index | Amg Southernsun vs. Vanguard Small Cap Index | Amg Southernsun vs. Vanguard Small Cap Index | Amg Southernsun vs. Fidelity Small 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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