Correlation Between Vanguard Small-cap and Channing Intrinsic

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

Diversification Opportunities for Vanguard Small-cap and Channing Intrinsic

0.85

Correlation Coefficient

Vanguard Small-cap  Channing Intrinsic

Very poor diversification

The 3 months correlation between Vanguard and Channing is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Channing Intrinsic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Channing Intrinsic Value 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 Channing Intrinsic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Channing Intrinsic Value has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Channing Intrinsic go up and down completely randomly.

Pair Corralation between Vanguard Small-cap and Channing Intrinsic

Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.85 times more return on investment than Channing Intrinsic. However, Vanguard Small Cap Index is 1.18 times less risky than Channing Intrinsic. It trades about 0.03 of its potential returns per unit of risk. Channing Intrinsic Value is currently generating about -0.03 per unit of risk. If you would invest  33,296  in Vanguard Small Cap Index on October 6, 2024 and sell it today you would earn a total of  390.00  from holding Vanguard Small Cap Index or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.62%
Values	Daily Returns

Vanguard Small Cap Index  vs.  Channing Intrinsic Value

Vanguard Small Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Channing Intrinsic Value

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Channing Intrinsic Value are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Channing Intrinsic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Small-cap and Channing Intrinsic

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

The idea behind Vanguard Small Cap Index and Channing Intrinsic 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.