Correlation Between Ballast SmallMid and Vanguard FTSE

Can any of the company-specific risk be diversified away by investing in both Ballast SmallMid and Vanguard FTSE 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 FTSE 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 FTSE Emerging, you can compare the effects of market volatilities on Ballast SmallMid and Vanguard FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballast SmallMid and Vanguard FTSE.

Diversification Opportunities for Ballast SmallMid and Vanguard FTSE

-0.48

Correlation Coefficient

Ballast SmallMid  Vanguard FTSE

Very good diversification

The 3 months correlation between Ballast and Vanguard is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ballast SmallMid Cap and Vanguard FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Emerging 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 FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Emerging has no effect on the direction of Ballast SmallMid i.e., Ballast SmallMid and Vanguard FTSE go up and down completely randomly.

Pair Corralation between Ballast SmallMid and Vanguard FTSE

Given the investment horizon of 90 days Ballast SmallMid Cap is expected to under-perform the Vanguard FTSE. In addition to that, Ballast SmallMid is 1.16 times more volatile than Vanguard FTSE Emerging. It trades about -0.11 of its total potential returns per unit of risk. Vanguard FTSE Emerging is currently generating about 0.05 per unit of volatility. If you would invest  4,407  in Vanguard FTSE Emerging on December 29, 2024 and sell it today you would earn a total of  124.00  from holding Vanguard FTSE Emerging or generate 2.81% return on investment over 90 days.

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

Ballast SmallMid Cap  vs.  Vanguard FTSE Emerging

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 FTSE Emerging

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Emerging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard FTSE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ballast SmallMid and Vanguard FTSE

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

The idea behind Ballast SmallMid Cap and Vanguard FTSE Emerging 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.