Correlation Between Vanguard Small-cap and Osterweis Strategic
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Osterweis Strategic 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 Osterweis Strategic 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 Osterweis Strategic Investment, you can compare the effects of market volatilities on Vanguard Small-cap and Osterweis Strategic 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 Osterweis Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Osterweis Strategic.
Diversification Opportunities for Vanguard Small-cap and Osterweis Strategic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Osterweis is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Osterweis Strategic Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osterweis Strategic 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 Osterweis Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osterweis Strategic has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Osterweis Strategic go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Osterweis Strategic
Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 2.24 times more return on investment than Osterweis Strategic. However, Vanguard Small-cap is 2.24 times more volatile than Osterweis Strategic Investment. It trades about 0.12 of its potential returns per unit of risk. Osterweis Strategic Investment is currently generating about 0.1 per unit of risk. If you would invest 10,570 in Vanguard Small Cap Index on August 29, 2024 and sell it today you would earn a total of 1,949 from holding Vanguard Small Cap Index or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Osterweis Strategic Investment
Performance |
| Timeline |
| Vanguard Small Cap |
| Osterweis Strategic |
Vanguard Small-cap and Osterweis Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Osterweis Strategic
The main advantage of trading using opposite Vanguard Small-cap and Osterweis Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Osterweis Strategic 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 Osterweis Strategic will offset losses from the drop in Osterweis Strategic'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 |
| Osterweis Strategic vs. Lord Abbett Inflation | Osterweis Strategic vs. Ab Bond Inflation | Osterweis Strategic vs. Oklahoma College Savings | Osterweis Strategic vs. Ab Bond Inflation |
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
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |