Correlation Between Vanguard and RBB Fund

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

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

Diversification Opportunities for Vanguard and RBB Fund

0.46

Correlation Coefficient

Vanguard  RBB Fund

Very weak diversification

The 3 months correlation between Vanguard and RBB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Small Cap and The RBB Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB Fund and Vanguard 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 SP Small Cap are associated (or correlated) with RBB Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Fund has no effect on the direction of Vanguard i.e., Vanguard and RBB Fund go up and down completely randomly.

Pair Corralation between Vanguard and RBB Fund

Given the investment horizon of 90 days Vanguard SP Small Cap is expected to generate 1.0 times more return on investment than RBB Fund. However, Vanguard SP Small Cap is 1.0 times less risky than RBB Fund. It trades about -0.18 of its potential returns per unit of risk. The RBB Fund is currently generating about -0.19 per unit of risk. If you would invest  12,829  in Vanguard SP Small Cap on November 28, 2024 and sell it today you would lose (1,396) from holding Vanguard SP Small Cap or give up 10.88% of portfolio value over 90 days.

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

Vanguard SP Small Cap  vs.  The RBB Fund

Vanguard SP Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard SP Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal 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.

RBB Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days The RBB Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Vanguard and RBB Fund

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

The idea behind Vanguard SP Small Cap and The RBB Fund 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.