Correlation Between Vanguard Small and Elevation Series

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

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

Diversification Opportunities for Vanguard Small and Elevation Series

0.04

Correlation Coefficient

Vanguard Small  Elevation Series

Significant diversification

The 3 months correlation between Vanguard and Elevation is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Elevation Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevation Series Trust and Vanguard 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 Vanguard Small Cap Index are associated (or correlated) with Elevation Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevation Series Trust has no effect on the direction of Vanguard Small i.e., Vanguard Small and Elevation Series go up and down completely randomly.

Pair Corralation between Vanguard Small and Elevation Series

Allowing for the 90-day total investment horizon Vanguard Small is expected to generate 2.09 times less return on investment than Elevation Series. But when comparing it to its historical volatility, Vanguard Small Cap Index is 1.11 times less risky than Elevation Series. It trades about 0.17 of its potential returns per unit of risk. Elevation Series Trust is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,658  in Elevation Series Trust on October 27, 2024 and sell it today you would earn a total of  167.00  from holding Elevation Series Trust or generate 6.28% return on investment over 90 days.

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

Vanguard Small Cap Index  vs.  Elevation Series Trust

Vanguard Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Vanguard Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Elevation Series Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elevation Series Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Elevation Series may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard Small and Elevation Series

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

The idea behind Vanguard Small Cap Index and Elevation Series Trust 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.