Correlation Between Vanguard Strategic and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Vanguard Strategic and Vanguard Small-cap 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 Strategic and Vanguard Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Strategic Small Cap and Vanguard Small Cap Index, you can compare the effects of market volatilities on Vanguard Strategic and Vanguard Small-cap 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 Strategic with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Strategic and Vanguard Small-cap.
Diversification Opportunities for Vanguard Strategic and Vanguard Small-cap
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between VANGUARD and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Strategic Small Cap and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Vanguard Strategic 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 Strategic Small Cap are associated (or correlated) with Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Vanguard Strategic i.e., Vanguard Strategic and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Vanguard Strategic and Vanguard Small-cap
Assuming the 90 days horizon Vanguard Strategic Small Cap is expected to generate 1.15 times more return on investment than Vanguard Small-cap. However, Vanguard Strategic is 1.15 times more volatile than Vanguard Small Cap Index. It trades about 0.09 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.09 per unit of risk. If you would invest 3,848 in Vanguard Strategic Small Cap on August 27, 2024 and sell it today you would earn a total of 786.00 from holding Vanguard Strategic Small Cap or generate 20.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Strategic Small Cap vs. Vanguard Small Cap Index
Performance |
| Timeline |
| Vanguard Strategic |
| Vanguard Small Cap |
Vanguard Strategic and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Strategic and Vanguard Small-cap
The main advantage of trading using opposite Vanguard Strategic and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Strategic position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| Vanguard Strategic vs. Vanguard Explorer Value | Vanguard Strategic vs. Vanguard Strategic Equity | Vanguard Strategic vs. Vanguard Diversified Equity | Vanguard Strategic vs. Vanguard Mid Cap |
| Vanguard Small-cap vs. Vanguard Mid Cap Index | Vanguard Small-cap vs. Vanguard Reit Index | Vanguard Small-cap vs. Vanguard Value Index | Vanguard Small-cap vs. Vanguard Small Cap Value |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |