Correlation Between Europac Gold and Vanguard Small

Can any of the company-specific risk be diversified away by investing in both Europac Gold and Vanguard Small 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 Europac Gold and Vanguard Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Europac Gold Fund and Vanguard Small Cap Value, you can compare the effects of market volatilities on Europac Gold and Vanguard Small 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 Europac Gold with a short position of Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Vanguard Small.

Diversification Opportunities for Europac Gold and Vanguard Small

-0.47

Correlation Coefficient

Europac Gold  Vanguard Small

Very good diversification

The 3 months correlation between Europac and Vanguard is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Europac Gold 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 Europac Gold Fund are associated (or correlated) with Vanguard Small. 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 Europac Gold i.e., Europac Gold and Vanguard Small go up and down completely randomly.

Pair Corralation between Europac Gold and Vanguard Small

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Vanguard Small. In addition to that, Europac Gold is 1.96 times more volatile than Vanguard Small Cap Value. It trades about -0.04 of its total potential returns per unit of risk. Vanguard Small Cap Value is currently generating about 0.11 per unit of volatility. If you would invest  4,710  in Vanguard Small Cap Value on September 16, 2024 and sell it today you would earn a total of  308.00  from holding Vanguard Small Cap Value or generate 6.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Europac Gold Fund  vs.  Vanguard Small Cap Value

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Europac Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Value are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Europac Gold and Vanguard Small

The main advantage of trading using opposite Europac Gold and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold position performs unexpectedly, Vanguard Small 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 will offset losses from the drop in Vanguard Small's long position.

The idea behind Europac Gold Fund and Vanguard Small Cap Value pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 CEOs Directory module to screen CEOs from public companies around the world.