Correlation Between Vanguard Small and 2023 EFT

Can any of the company-specific risk be diversified away by investing in both Vanguard Small and 2023 EFT 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 2023 EFT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Small Cap Value and 2023 EFT Series, you can compare the effects of market volatilities on Vanguard Small and 2023 EFT 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 2023 EFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and 2023 EFT.

Diversification Opportunities for Vanguard Small and 2023 EFT

0.78

Correlation Coefficient

Vanguard Small  2023 EFT

Poor diversification

The 3 months correlation between Vanguard and 2023 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and 2023 EFT Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 EFT Series 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 Value are associated (or correlated) with 2023 EFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 EFT Series has no effect on the direction of Vanguard Small i.e., Vanguard Small and 2023 EFT go up and down completely randomly.

Pair Corralation between Vanguard Small and 2023 EFT

Considering the 90-day investment horizon Vanguard Small Cap Value is expected to under-perform the 2023 EFT. In addition to that, Vanguard Small is 1.26 times more volatile than 2023 EFT Series. It trades about -0.15 of its total potential returns per unit of risk. 2023 EFT Series is currently generating about -0.09 per unit of volatility. If you would invest  3,195  in 2023 EFT Series on November 28, 2024 and sell it today you would lose (118.00) from holding 2023 EFT Series or give up 3.69% of portfolio value over 90 days.

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

Vanguard Small Cap Value  vs.  2023 EFT Series

Vanguard Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Small Cap Value has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Etf's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

2023 EFT Series

Risk-Adjusted Performance

Very Weak

Over the last 90 days 2023 EFT Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, 2023 EFT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Small and 2023 EFT

The main advantage of trading using opposite Vanguard Small and 2023 EFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, 2023 EFT 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 2023 EFT will offset losses from the drop in 2023 EFT's long position.

The idea behind Vanguard Small Cap Value and 2023 EFT Series 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.