Correlation Between Vanguard Small-cap and SPACE
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and SPACE 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 SPACE 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 SPACE, you can compare the effects of market volatilities on Vanguard Small-cap and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and SPACE.
Diversification Opportunities for Vanguard Small-cap and SPACE
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and SPACE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and SPACE go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and SPACE
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 4.51 times less return on investment than SPACE. But when comparing it to its historical volatility, Vanguard Small Cap Index is 4.93 times less risky than SPACE. It trades about 0.23 of its potential returns per unit of risk. SPACE is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 33.00 in SPACE on September 2, 2024 and sell it today you would earn a total of 26.00 from holding SPACE or generate 78.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.97% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. SPACE
Performance |
| Timeline |
| Vanguard Small Cap |
| SPACE |
Vanguard Small-cap and SPACE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and SPACE
The main advantage of trading using opposite Vanguard Small-cap and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE's long position.| Vanguard Small-cap vs. Vanguard Strategic Small Cap | Vanguard Small-cap vs. Vanguard Emerging Markets | Vanguard Small-cap vs. Vanguard Diversified Equity | Vanguard Small-cap vs. Vanguard Mid 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |