Correlation Between Vanguard Small and ETF Opportunities

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

Diversification Opportunities for Vanguard Small and ETF Opportunities

0.84

Correlation Coefficient

Vanguard Small  ETF Opportunities

Very poor diversification

The 3 months correlation between Vanguard and ETF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and ETF Opportunities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Opportunities 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 ETF Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Opportunities Trust has no effect on the direction of Vanguard Small i.e., Vanguard Small and ETF Opportunities go up and down completely randomly.

Pair Corralation between Vanguard Small and ETF Opportunities

Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to under-perform the ETF Opportunities. In addition to that, Vanguard Small is 1.38 times more volatile than ETF Opportunities Trust. It trades about -0.29 of its total potential returns per unit of risk. ETF Opportunities Trust is currently generating about -0.03 per unit of volatility. If you would invest  3,746  in ETF Opportunities Trust on October 1, 2024 and sell it today you would lose (19.00) from holding ETF Opportunities Trust or give up 0.51% of portfolio value over 90 days.

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

Vanguard Small Cap Index  vs.  ETF Opportunities Trust

Vanguard Small Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Vanguard Small is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ETF Opportunities Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Opportunities Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, ETF Opportunities is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vanguard Small and ETF Opportunities

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

The idea behind Vanguard Small Cap Index and ETF Opportunities 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.