Correlation Between Vanguard Small-cap and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Emerald Growth 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 Emerald Growth 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 Emerald Growth Fund, you can compare the effects of market volatilities on Vanguard Small-cap and Emerald Growth 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 Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Emerald Growth.
Diversification Opportunities for Vanguard Small-cap and Emerald Growth
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Emerald is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth 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 Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Emerald Growth go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Emerald Growth
Assuming the 90 days horizon Vanguard Small Cap Growth is expected to generate 0.77 times more return on investment than Emerald Growth. However, Vanguard Small Cap Growth is 1.3 times less risky than Emerald Growth. It trades about 0.47 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.32 per unit of risk. If you would invest 7,512 in Vanguard Small Cap Growth on September 1, 2024 and sell it today you would earn a total of 969.00 from holding Vanguard Small Cap Growth or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Emerald Growth Fund
Performance |
| Timeline |
| Vanguard Small Cap |
| Emerald Growth |
Vanguard Small-cap and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Emerald Growth
The main advantage of trading using opposite Vanguard Small-cap and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Emerald Growth 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 Emerald Growth will offset losses from the drop in Emerald Growth's long position.| Vanguard Small-cap vs. Pro Blend Moderate Term | Vanguard Small-cap vs. Franklin Lifesmart Retirement | Vanguard Small-cap vs. Calvert Moderate Allocation | Vanguard Small-cap vs. Tiaa Cref Lifestyle Moderate |
| Emerald Growth vs. Emerald Banking And | Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Emerald Insights Fund | Emerald Growth vs. Emerald Insights 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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