Correlation Between Vanguard Small and Ancora Microcap
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Ancora Microcap 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 and Ancora Microcap 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 Ancora Microcap Fund, you can compare the effects of market volatilities on Vanguard Small and Ancora Microcap 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 with a short position of Ancora Microcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Ancora Microcap.
Diversification Opportunities for Vanguard Small and Ancora Microcap
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Ancora is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Ancora Microcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ancora Microcap and Vanguard Small 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 Ancora Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ancora Microcap has no effect on the direction of Vanguard Small i.e., Vanguard Small and Ancora Microcap go up and down completely randomly.
Pair Corralation between Vanguard Small and Ancora Microcap
Assuming the 90 days horizon Vanguard Small Cap Value is expected to under-perform the Ancora Microcap. In addition to that, Vanguard Small is 1.19 times more volatile than Ancora Microcap Fund. It trades about -0.25 of its total potential returns per unit of risk. Ancora Microcap Fund is currently generating about -0.29 per unit of volatility. If you would invest 1,734 in Ancora Microcap Fund on February 1, 2024 and sell it today you would lose (87.00) from holding Ancora Microcap Fund or give up 5.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Small Cap Value vs. Ancora Microcap Fund
Performance |
Timeline |
Vanguard Small Cap |
Ancora Microcap |
Vanguard Small and Ancora Microcap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Small and Ancora Microcap
The main advantage of trading using opposite Vanguard Small and Ancora Microcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Ancora Microcap 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 Ancora Microcap will offset losses from the drop in Ancora Microcap's long position.Vanguard Small vs. Vanguard Materials Index | Vanguard Small vs. Vanguard Limited Term Tax Exempt | Vanguard Small vs. Vanguard Limited Term Tax Exempt | Vanguard Small vs. Vanguard Global Minimum |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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