Correlation Between Vanguard Small-cap and Oppenhmr Discovery

Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Oppenhmr Discovery 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-cap and Oppenhmr Discovery 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 Oppenhmr Discovery Mid, you can compare the effects of market volatilities on Vanguard Small-cap and Oppenhmr Discovery 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-cap with a short position of Oppenhmr Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Oppenhmr Discovery.

Diversification Opportunities for Vanguard Small-cap and Oppenhmr Discovery

0.97

Correlation Coefficient

Vanguard Small-cap  Oppenhmr Discovery

Almost no diversification

The 3 months correlation between Vanguard and Oppenhmr is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Oppenhmr Discovery Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenhmr Discovery Mid and Vanguard Small-cap 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 Oppenhmr Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenhmr Discovery Mid has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Oppenhmr Discovery go up and down completely randomly.

Pair Corralation between Vanguard Small-cap and Oppenhmr Discovery

Assuming the 90 days horizon Vanguard Small Cap Growth is expected to generate 0.82 times more return on investment than Oppenhmr Discovery. However, Vanguard Small Cap Growth is 1.22 times less risky than Oppenhmr Discovery. It trades about -0.11 of its potential returns per unit of risk. Oppenhmr Discovery Mid is currently generating about -0.12 per unit of risk. If you would invest  7,872  in Vanguard Small Cap Growth on December 31, 2024 and sell it today you would lose (758.00) from holding Vanguard Small Cap Growth or give up 9.63% of portfolio value over 90 days.

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

Vanguard Small Cap Growth  vs.  Oppenhmr Discovery Mid

Vanguard Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Small Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Oppenhmr Discovery Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oppenhmr Discovery Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Vanguard Small-cap and Oppenhmr Discovery

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

The idea behind Vanguard Small Cap Growth and Oppenhmr Discovery Mid 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..