Correlation Between Vanguard Small and USLB

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

Diversification Opportunities for Vanguard Small and USLB

0.0

Correlation Coefficient

Vanguard Small  USLB

Pay attention - limited upside

The 3 months correlation between Vanguard and USLB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and USLB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USLB 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 USLB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USLB has no effect on the direction of Vanguard Small i.e., Vanguard Small and USLB go up and down completely randomly.

Pair Corralation between Vanguard Small and USLB

If you would invest  18,424  in Vanguard Small Cap Value on March 4, 2024 and sell it today you would earn a total of  366.00  from holding Vanguard Small Cap Value or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Vanguard Small Cap Value  vs.  USLB

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 Value are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Vanguard Small is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

USLB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days USLB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, USLB 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 and USLB

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

The idea behind Vanguard Small Cap Value and USLB 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.