Correlation Between Vanguard Small and VanEck Low

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

By analyzing existing cross correlation between Vanguard Small Cap Growth and VanEck Low Carbon, you can compare the effects of market volatilities on Vanguard Small and VanEck Low 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 VanEck Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and VanEck Low.

Diversification Opportunities for Vanguard Small and VanEck Low

-0.59

Correlation Coefficient

Vanguard Small  VanEck Low

Excellent diversification

The 3 months correlation between Vanguard and VanEck is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and VanEck Low Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Low Carbon 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 Growth are associated (or correlated) with VanEck Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Low Carbon has no effect on the direction of Vanguard Small i.e., Vanguard Small and VanEck Low go up and down completely randomly.

Pair Corralation between Vanguard Small and VanEck Low

Considering the 90-day investment horizon Vanguard Small Cap Growth is expected to generate 0.88 times more return on investment than VanEck Low. However, Vanguard Small Cap Growth is 1.14 times less risky than VanEck Low. It trades about 0.06 of its potential returns per unit of risk. VanEck Low Carbon is currently generating about -0.01 per unit of risk. If you would invest  21,374  in Vanguard Small Cap Growth on October 7, 2024 and sell it today you would earn a total of  7,250  from holding Vanguard Small Cap Growth or generate 33.92% return on investment over 90 days.

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

Vanguard Small Cap Growth  vs.  VanEck Low Carbon

Vanguard Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Growth are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental drivers, Vanguard Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

VanEck Low Carbon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Low Carbon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Vanguard Small and VanEck Low

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

The idea behind Vanguard Small Cap Growth and VanEck Low Carbon 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.