Correlation Between Vanguard Small-cap and Acclivity Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Acclivity Small 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 Acclivity Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Acclivity Small Cap, you can compare the effects of market volatilities on Vanguard Small-cap and Acclivity Small 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 Acclivity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Acclivity Small.
Diversification Opportunities for Vanguard Small-cap and Acclivity Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Acclivity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Acclivity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acclivity Small Cap 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 Value are associated (or correlated) with Acclivity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acclivity Small Cap has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Acclivity Small go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Acclivity Small
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 0.83 times more return on investment than Acclivity Small. However, Vanguard Small Cap Value is 1.2 times less risky than Acclivity Small. It trades about 0.06 of its potential returns per unit of risk. Acclivity Small Cap is currently generating about 0.03 per unit of risk. If you would invest 3,654 in Vanguard Small Cap Value on December 1, 2024 and sell it today you would earn a total of 1,095 from holding Vanguard Small Cap Value or generate 29.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Acclivity Small Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Acclivity Small Cap |
Vanguard Small-cap and Acclivity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Acclivity Small
The main advantage of trading using opposite Vanguard Small-cap and Acclivity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Acclivity Small 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 Acclivity Small will offset losses from the drop in Acclivity Small's long position.| Vanguard Small-cap vs. Red Oak Technology | Vanguard Small-cap vs. Hennessy Technology Fund | Vanguard Small-cap vs. Baron Select Funds | Vanguard Small-cap vs. Vanguard Information Technology |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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