Correlation Between Vy Baron and Smallcap Growth

Can any of the company-specific risk be diversified away by investing in both Vy Baron and Smallcap Growth 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 Vy Baron and Smallcap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vy Baron Growth and Smallcap Growth Fund, you can compare the effects of market volatilities on Vy Baron and Smallcap Growth 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 Vy Baron with a short position of Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vy Baron and Smallcap Growth.

Diversification Opportunities for Vy Baron and Smallcap Growth

0.9

Correlation Coefficient

Vy Baron  Smallcap Growth

Almost no diversification

The 3 months correlation between IBSSX and Smallcap is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vy Baron Growth and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth and Vy Baron 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 Vy Baron Growth are associated (or correlated) with Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Vy Baron i.e., Vy Baron and Smallcap Growth go up and down completely randomly.

Pair Corralation between Vy Baron and Smallcap Growth

Assuming the 90 days horizon Vy Baron is expected to generate 2.78 times less return on investment than Smallcap Growth. But when comparing it to its historical volatility, Vy Baron Growth is 1.39 times less risky than Smallcap Growth. It trades about 0.06 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,553  in Smallcap Growth Fund on September 16, 2024 and sell it today you would earn a total of  124.00  from holding Smallcap Growth Fund or generate 7.98% return on investment over 90 days.

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

Vy Baron Growth  vs.  Smallcap Growth Fund

Vy Baron Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vy Baron Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vy Baron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smallcap Growth

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Vy Baron and Smallcap Growth

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

The idea behind Vy Baron Growth and Smallcap Growth Fund 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.

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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.