Correlation Between Vanguard Small-cap and Vanguard Short
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Vanguard Short 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 Vanguard Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Vanguard Short Term Bond, you can compare the effects of market volatilities on Vanguard Small-cap and Vanguard Short 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 Vanguard Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Vanguard Short.
Diversification Opportunities for Vanguard Small-cap and Vanguard Short
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Vanguard is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Vanguard Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term 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 Growth are associated (or correlated) with Vanguard Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Vanguard Short go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Vanguard Short
Assuming the 90 days horizon Vanguard Small Cap Growth is expected to under-perform the Vanguard Short. In addition to that, Vanguard Small-cap is 13.71 times more volatile than Vanguard Short Term Bond. It trades about -0.2 of its total potential returns per unit of risk. Vanguard Short Term Bond is currently generating about -0.35 per unit of volatility. If you would invest 1,019 in Vanguard Short Term Bond on October 7, 2024 and sell it today you would lose (7.00) from holding Vanguard Short Term Bond or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Vanguard Short Term Bond
Performance |
| Timeline |
| Vanguard Small Cap |
| Vanguard Short Term |
Vanguard Small-cap and Vanguard Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Vanguard Short
The main advantage of trading using opposite Vanguard Small-cap and Vanguard Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Vanguard Short 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 Vanguard Short will offset losses from the drop in Vanguard Short's long position.| Vanguard Small-cap vs. Vanguard Mid Cap Growth | Vanguard Small-cap vs. Vanguard Small Cap Value | Vanguard Small-cap vs. Vanguard Growth Index | Vanguard Small-cap vs. Vanguard Mid Cap Value |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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