Correlation Between Vanguard Extended and Greenspring Fund

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

By analyzing existing cross correlation between Vanguard Extended Market and Greenspring Fund Retail, you can compare the effects of market volatilities on Vanguard Extended and Greenspring Fund 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 Extended with a short position of Greenspring Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Greenspring Fund.

Diversification Opportunities for Vanguard Extended and Greenspring Fund

0.77

Correlation Coefficient

Vanguard Extended  Greenspring Fund

Poor diversification

The 3 months correlation between Vanguard and Greenspring is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Greenspring Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenspring Fund Retail and Vanguard Extended 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 Extended Market are associated (or correlated) with Greenspring Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenspring Fund Retail has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Greenspring Fund go up and down completely randomly.

Pair Corralation between Vanguard Extended and Greenspring Fund

Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.12 times more return on investment than Greenspring Fund. However, Vanguard Extended is 1.12 times more volatile than Greenspring Fund Retail. It trades about 0.08 of its potential returns per unit of risk. Greenspring Fund Retail is currently generating about 0.03 per unit of risk. If you would invest  20,858  in Vanguard Extended Market on September 16, 2024 and sell it today you would earn a total of  3,638  from holding Vanguard Extended Market or generate 17.44% return on investment over 90 days.

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

Vanguard Extended Market  vs.  Greenspring Fund Retail

Vanguard Extended Market

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Extended Market are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Vanguard Extended may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Greenspring Fund Retail

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenspring Fund Retail are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Greenspring Fund 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 Extended and Greenspring Fund

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

The idea behind Vanguard Extended Market and Greenspring Fund Retail 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.