Correlation Between Issachar Fund and Vanguard Small-cap

Can any of the company-specific risk be diversified away by investing in both Issachar Fund 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 Issachar Fund 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 Issachar Fund Class and Vanguard Small Cap Growth, you can compare the effects of market volatilities on Issachar Fund 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 Issachar Fund with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Issachar Fund and Vanguard Small-cap.

Diversification Opportunities for Issachar Fund and Vanguard Small-cap

0.75

Correlation Coefficient

Issachar Fund  Vanguard Small-cap

Poor diversification

The 3 months correlation between Issachar and Vanguard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Issachar Fund Class and Vanguard Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Issachar Fund 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 Issachar Fund Class 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 Issachar Fund i.e., Issachar Fund and Vanguard Small-cap go up and down completely randomly.

Pair Corralation between Issachar Fund and Vanguard Small-cap

Assuming the 90 days horizon Issachar Fund Class is expected to generate 0.98 times more return on investment than Vanguard Small-cap. However, Issachar Fund Class is 1.02 times less risky than Vanguard Small-cap. It trades about -0.27 of its potential returns per unit of risk. Vanguard Small Cap Growth is currently generating about -0.31 per unit of risk. If you would invest  985.00  in Issachar Fund Class on December 1, 2024 and sell it today you would lose (60.00) from holding Issachar Fund Class or give up 6.09% of portfolio value over 90 days.

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

Issachar Fund Class  vs.  Vanguard Small Cap Growth

Issachar Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Issachar Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Vanguard Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Small Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Issachar Fund and Vanguard Small-cap

The main advantage of trading using opposite Issachar Fund and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Issachar Fund 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.

The idea behind Issachar Fund Class and Vanguard Small Cap Growth 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.