Correlation Between Teton Westwood and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Teton Westwood 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 Teton Westwood 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 Teton Westwood Mighty and Vanguard Small Cap Index, you can compare the effects of market volatilities on Teton Westwood 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 Teton Westwood with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teton Westwood and Vanguard Small-cap.
Diversification Opportunities for Teton Westwood and Vanguard Small-cap
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Teton and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Teton Westwood Mighty 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 Teton Westwood 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 Teton Westwood Mighty 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 Teton Westwood i.e., Teton Westwood and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Teton Westwood and Vanguard Small-cap
Assuming the 90 days horizon Teton Westwood Mighty is expected to under-perform the Vanguard Small-cap. In addition to that, Teton Westwood is 2.1 times more volatile than Vanguard Small Cap Index. It trades about -0.03 of its total potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.12 per unit of volatility. If you would invest 10,506 in Vanguard Small Cap Index on September 1, 2024 and sell it today you would earn a total of 1,936 from holding Vanguard Small Cap Index or generate 18.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Teton Westwood Mighty vs. Vanguard Small Cap Index
Performance |
| Timeline |
| Teton Westwood Mighty |
| Vanguard Small Cap |
Teton Westwood and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teton Westwood and Vanguard Small-cap
The main advantage of trading using opposite Teton Westwood and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teton Westwood 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.| Teton Westwood vs. The Gabelli Small | Teton Westwood vs. Teton Westwood Equity | Teton Westwood vs. Teton Westwood Small | Teton Westwood vs. The Gabelli Equity |
| 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 |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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