Correlation Between Vanguard Small-cap and Mutual Of

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

Diversification Opportunities for Vanguard Small-cap and Mutual Of

0.78

Correlation Coefficient

Vanguard Small-cap  Mutual Of

Poor diversification

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

Pair Corralation between Vanguard Small-cap and Mutual Of

Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 0.78 times more return on investment than Mutual Of. However, Vanguard Small Cap Value is 1.29 times less risky than Mutual Of. It trades about -0.15 of its potential returns per unit of risk. Mutual Of America is currently generating about -0.18 per unit of risk. If you would invest  5,151  in Vanguard Small Cap Value on November 29, 2024 and sell it today you would lose (406.00) from holding Vanguard Small Cap Value or give up 7.88% 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.  Mutual Of America

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 fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mutual Of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mutual Of America 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-looking signals remain fairly strong which may send shares a bit higher in March 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 Mutual Of

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

The idea behind Vanguard Small Cap Value and Mutual Of America 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.