Correlation Between Vanguard Scottsdale and Vanguard Small

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

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

Diversification Opportunities for Vanguard Scottsdale and Vanguard Small

0.98

Correlation Coefficient

Vanguard Scottsdale  Vanguard Small

Almost no diversification

The 3 months correlation between Vanguard and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Scottsdale Funds and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Vanguard Scottsdale 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 Scottsdale Funds are associated (or correlated) with Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Vanguard Scottsdale i.e., Vanguard Scottsdale and Vanguard Small go up and down completely randomly.

Pair Corralation between Vanguard Scottsdale and Vanguard Small

Assuming the 90 days horizon Vanguard Scottsdale Funds is expected to under-perform the Vanguard Small. In addition to that, Vanguard Scottsdale is 1.09 times more volatile than Vanguard Small Cap Value. It trades about -0.11 of its total potential returns per unit of risk. Vanguard Small Cap Value is currently generating about -0.08 per unit of volatility. If you would invest  19,635  in Vanguard Small Cap Value on December 30, 2024 and sell it today you would lose (1,077) from holding Vanguard Small Cap Value or give up 5.49% of portfolio value over 90 days.

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

Vanguard Scottsdale Funds  vs.  Vanguard Small Cap Value

Vanguard Scottsdale Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Scottsdale Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

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 investors with long positions. Even with relatively invariable fundamental drivers, Vanguard Small is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vanguard Scottsdale and Vanguard Small

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

The idea behind Vanguard Scottsdale Funds and Vanguard Small Cap Value 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.