Correlation Between Vanguard Small and American Mutual
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and American Mutual 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 American Mutual 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 American Mutual Fund, you can compare the effects of market volatilities on Vanguard Small and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and American Mutual.
Diversification Opportunities for Vanguard Small and American Mutual
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and American is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Vanguard Small i.e., Vanguard Small and American Mutual go up and down completely randomly.
Pair Corralation between Vanguard Small and American Mutual
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 1.56 times more return on investment than American Mutual. However, Vanguard Small is 1.56 times more volatile than American Mutual Fund. It trades about 0.05 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.06 per unit of risk. If you would invest 4,248 in Vanguard Small Cap Value on September 25, 2024 and sell it today you would earn a total of 518.00 from holding Vanguard Small Cap Value or generate 12.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Small Cap Value vs. American Mutual Fund
Performance |
Timeline |
Vanguard Small Cap |
American Mutual |
Vanguard Small and American Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Small and American Mutual
The main advantage of trading using opposite Vanguard Small and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.Vanguard Small vs. Pace High Yield | Vanguard Small vs. Ab Global Bond | Vanguard Small vs. Touchstone Premium Yield | Vanguard Small vs. Dreyfusstandish Global Fixed |
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Check out your portfolio center.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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