Correlation Between Vanguard Small-cap and Pioneer Multi-asset

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

Diversification Opportunities for Vanguard Small-cap and Pioneer Multi-asset

-0.29

Correlation Coefficient

Vanguard Small-cap  Pioneer Multi-asset

Very good diversification

The 3 months correlation between Vanguard and Pioneer is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Pioneer Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Multi Asset 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 Pioneer Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Multi Asset has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Pioneer Multi-asset go up and down completely randomly.

Pair Corralation between Vanguard Small-cap and Pioneer Multi-asset

Assuming the 90 days horizon Vanguard Small Cap Value is expected to under-perform the Pioneer Multi-asset. In addition to that, Vanguard Small-cap is 3.0 times more volatile than Pioneer Multi Asset Income. It trades about -0.09 of its total potential returns per unit of risk. Pioneer Multi Asset Income is currently generating about 0.31 per unit of volatility. If you would invest  1,144  in Pioneer Multi Asset Income on December 29, 2024 and sell it today you would earn a total of  78.00  from holding Pioneer Multi Asset Income or generate 6.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Vanguard Small Cap Value  vs.  Pioneer Multi Asset Income

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 fairly strong basic indicators, Vanguard Small-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pioneer Multi Asset

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Multi Asset Income are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Pioneer Multi-asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vanguard Small-cap and Pioneer Multi-asset

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

The idea behind Vanguard Small Cap Value and Pioneer Multi Asset Income 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.