Correlation Between Vanguard Small-cap and The Gabelli
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and The Gabelli 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 The Gabelli 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 The Gabelli Small, you can compare the effects of market volatilities on Vanguard Small-cap and The Gabelli 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 The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and The Gabelli.
Diversification Opportunities for Vanguard Small-cap and The Gabelli
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and The is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and The Gabelli Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli 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 The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Small has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and The Gabelli go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and The Gabelli
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.89 times more return on investment than The Gabelli. However, Vanguard Small Cap Index is 1.12 times less risky than The Gabelli. It trades about 0.39 of its potential returns per unit of risk. The Gabelli Small is currently generating about 0.3 per unit of risk. If you would invest 11,352 in Vanguard Small Cap Index on September 3, 2024 and sell it today you would earn a total of 1,122 from holding Vanguard Small Cap Index or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. The Gabelli Small
Performance |
| Timeline |
| Vanguard Small Cap |
| Gabelli Small |
Vanguard Small-cap and The Gabelli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and The Gabelli
The main advantage of trading using opposite Vanguard Small-cap and The Gabelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, The Gabelli 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 The Gabelli will offset losses from the drop in The Gabelli's long position.| Vanguard Small-cap vs. Vanguard Mid Cap Index | Vanguard Small-cap vs. Vanguard 500 Index | Vanguard Small-cap vs. Vanguard Emerging Markets | Vanguard Small-cap vs. Vanguard Reit Index |
| The Gabelli vs. Vanguard Small Cap Index | The Gabelli vs. Vanguard Small Cap Index | The Gabelli vs. Vanguard Small Cap Index | The Gabelli vs. Vanguard Small Cap Index |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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