Correlation Between Saratoga Small and Vanguard Small-Cap

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

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

Diversification Opportunities for Saratoga Small and Vanguard Small-Cap

0.6
  Correlation Coefficient
Saratoga Small Capit
Vanguard Small-Cap Growth

Poor diversification

The 3 months correlation between Saratoga and Vanguard is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Small Capitalization and Vanguard Small-Cap Growth in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small-Cap Growth and Saratoga 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 Saratoga Small Capitalization are associated (or correlated) with Vanguard Small-Cap. 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 Growth has no effect on the direction of Saratoga Small i.e., Saratoga Small and Vanguard Small-Cap go up and down completely randomly.

Pair Corralation between Saratoga Small and Vanguard Small-Cap

Assuming the 90 days horizon Saratoga Small Capitalization is expected to generate 1.09 times more return on investment than Vanguard Small-Cap. However, Saratoga Small is 1.09 times more volatile than Vanguard Small-Cap Growth. It trades about 0.05 of its potential returns per unit of risk. Vanguard Small-Cap Growth is currently generating about 0.05 per unit of risk. If you would invest  582.00  in Saratoga Small Capitalization on September 4, 2021 and sell it today you would earn a total of  309.00  from holding Saratoga Small Capitalization or generate 53.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Saratoga Small Capitalization  vs.  Vanguard Small-Cap Growth

 Performance (%) 
      Timeline 
Saratoga Small Capit 
Saratoga Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Saratoga Small Capitalization are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Saratoga Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Vanguard Small-Cap Growth 
Vanguard Performance
0 of 100
Over the last 90 days Vanguard Small-Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward 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.

Saratoga Small and Vanguard Small-Cap Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Saratoga Small and Vanguard Small-Cap

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

Saratoga Small Capitalization

Pair trading matchups for Saratoga Small

The idea behind Saratoga Small Capitalization and Vanguard Small-Cap Growth 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.

Vanguard Small-Cap Growth

Pair trading matchups for Vanguard Small-Cap

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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