Correlation Between Ab Small and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small 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 Ab Small Cap and Vanguard Small Cap Value, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Vanguard Small-cap.
Diversification Opportunities for Ab Small and Vanguard Small-cap
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SCAVX and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap 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 Ab Small 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 Ab Small Cap 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 Ab Small i.e., Ab Small and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Ab Small and Vanguard Small-cap
Assuming the 90 days horizon Ab Small Cap is expected to under-perform the Vanguard Small-cap. In addition to that, Ab Small is 1.08 times more volatile than Vanguard Small Cap Value. It trades about -0.13 of its total potential returns per unit of risk. Vanguard Small Cap Value is currently generating about -0.09 per unit of volatility. If you would invest 4,739 in Vanguard Small Cap Value on December 29, 2024 and sell it today you would lose (288.00) from holding Vanguard Small Cap Value or give up 6.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.39% |
Values | Daily Returns |
Ab Small Cap vs. Vanguard Small Cap Value
Performance |
Timeline |
Ab Small Cap |
Vanguard Small Cap |
Ab Small and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Small and Vanguard Small-cap
The main advantage of trading using opposite Ab Small and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.Ab Small vs. Us Government Securities | Ab Small vs. Fidelity Series Government | Ab Small vs. Fidelity Government Income | Ab Small vs. Franklin Adjustable Government |
Vanguard Small-cap vs. Us Government Securities | Vanguard Small-cap vs. Franklin Adjustable Government | Vanguard Small-cap vs. Us Government Securities | Vanguard Small-cap vs. Morgan Stanley Government |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
Transaction History View history of all your transactions and understand their impact on performance | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |