Correlation Between Vanguard Small-cap and Oak Ridge
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Oak Ridge 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 Oak Ridge 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 Oak Ridge Small, you can compare the effects of market volatilities on Vanguard Small-cap and Oak Ridge 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 Oak Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Oak Ridge.
Diversification Opportunities for Vanguard Small-cap and Oak Ridge
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and OAK is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Oak Ridge Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Small has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Oak Ridge go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Oak Ridge
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.23 times less return on investment than Oak Ridge. But when comparing it to its historical volatility, Vanguard Small Cap Index is 1.34 times less risky than Oak Ridge. It trades about 0.29 of its potential returns per unit of risk. Oak Ridge Small is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Oak Ridge Small on August 28, 2024 and sell it today you would earn a total of 103.00 from holding Oak Ridge Small or generate 9.56% 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 Index vs. Oak Ridge Small
Performance |
| Timeline |
| Vanguard Small Cap |
| Oak Ridge Small |
Vanguard Small-cap and Oak Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Oak Ridge
The main advantage of trading using opposite Vanguard Small-cap and Oak Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Oak Ridge 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 Oak Ridge will offset losses from the drop in Oak Ridge'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 |
| Oak Ridge vs. North Square Investments | Oak Ridge vs. Advisory Research Strategic | Oak Ridge vs. Api Efficient Frontier | Oak Ridge vs. Oak Ridge Multi |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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