Correlation Between Ballast SmallMid and Vanguard Value

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

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

Diversification Opportunities for Ballast SmallMid and Vanguard Value

0.88

Correlation Coefficient

Ballast SmallMid  Vanguard Value

Very poor diversification

The 3 months correlation between Ballast and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ballast SmallMid Cap and Vanguard Value Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Factor and Ballast SmallMid 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 Ballast SmallMid Cap are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Factor has no effect on the direction of Ballast SmallMid i.e., Ballast SmallMid and Vanguard Value go up and down completely randomly.

Pair Corralation between Ballast SmallMid and Vanguard Value

Given the investment horizon of 90 days Ballast SmallMid Cap is expected to under-perform the Vanguard Value. In addition to that, Ballast SmallMid is 1.15 times more volatile than Vanguard Value Factor. It trades about -0.11 of its total potential returns per unit of risk. Vanguard Value Factor is currently generating about -0.04 per unit of volatility. If you would invest  11,705  in Vanguard Value Factor on December 29, 2024 and sell it today you would lose (335.00) from holding Vanguard Value Factor or give up 2.86% of portfolio value over 90 days.

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

Ballast SmallMid Cap  vs.  Vanguard Value Factor

Ballast SmallMid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballast SmallMid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Vanguard Value Factor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Value Factor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vanguard Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ballast SmallMid and Vanguard Value

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

The idea behind Ballast SmallMid Cap and Vanguard Value Factor 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.