Correlation Between Vanguard Small-cap and Kopernik International
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Kopernik International 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 Kopernik International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Kopernik International, you can compare the effects of market volatilities on Vanguard Small-cap and Kopernik International 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 Kopernik International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Kopernik International.
Diversification Opportunities for Vanguard Small-cap and Kopernik International
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and Kopernik is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Kopernik International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik International 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 Index are associated (or correlated) with Kopernik International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik International has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Kopernik International go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Kopernik International
Assuming the 90 days horizon Vanguard Small Cap Index is expected to under-perform the Kopernik International. In addition to that, Vanguard Small-cap is 1.62 times more volatile than Kopernik International. It trades about -0.13 of its total potential returns per unit of risk. Kopernik International is currently generating about 0.22 per unit of volatility. If you would invest 1,274 in Kopernik International on December 5, 2024 and sell it today you would earn a total of 68.00 from holding Kopernik International or generate 5.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Small Cap Index vs. Kopernik International
Performance |
Timeline |
Vanguard Small Cap |
Kopernik International |
Vanguard Small-cap and Kopernik International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Small-cap and Kopernik International
The main advantage of trading using opposite Vanguard Small-cap and Kopernik International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Kopernik International 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 Kopernik International will offset losses from the drop in Kopernik International's long position.Vanguard Small-cap vs. Vanguard Mid Cap Index | Vanguard Small-cap vs. Vanguard Total Bond | Vanguard Small-cap vs. Vanguard Institutional Index | Vanguard Small-cap vs. Vanguard Total International |
Kopernik International vs. Calvert Short Duration | Kopernik International vs. Rbc Short Duration | Kopernik International vs. Metropolitan West Ultra | Kopernik International vs. Barings Active Short |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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