Correlation Between Vanguard Extended and Apexcm Smallmid

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

Diversification Opportunities for Vanguard Extended and Apexcm Smallmid

0.95

Correlation Coefficient

Vanguard Extended  Apexcm Smallmid

Almost no diversification

The 3 months correlation between Vanguard and Apexcm is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Apexcm Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apexcm Smallmid Cap 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 Apexcm Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apexcm Smallmid Cap has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Apexcm Smallmid go up and down completely randomly.

Pair Corralation between Vanguard Extended and Apexcm Smallmid

Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.13 times more return on investment than Apexcm Smallmid. However, Vanguard Extended is 1.13 times more volatile than Apexcm Smallmid Cap. It trades about -0.16 of its potential returns per unit of risk. Apexcm Smallmid Cap is currently generating about -0.2 per unit of risk. If you would invest  13,081  in Vanguard Extended Market on January 26, 2024 and sell it today you would lose (474.00) from holding Vanguard Extended Market or give up 3.62% of portfolio value over 90 days.

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

Vanguard Extended Market  vs.  Apexcm Smallmid Cap

Vanguard Extended Market

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Extended Market are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Vanguard Extended is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Apexcm Smallmid Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apexcm Smallmid Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Apexcm Smallmid 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 Apexcm Smallmid

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

The idea behind Vanguard Extended Market and Apexcm Smallmid Cap 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.