Correlation Between Vanguard and Series Portfolios

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

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

Diversification Opportunities for Vanguard and Series Portfolios

0.93

Correlation Coefficient

Vanguard  Series Portfolios

Almost no diversification

The 3 months correlation between Vanguard and Series is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Small Cap and Series Portfolios Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Series Portfolios Trust and Vanguard 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 SP Small Cap are associated (or correlated) with Series Portfolios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Series Portfolios Trust has no effect on the direction of Vanguard i.e., Vanguard and Series Portfolios go up and down completely randomly.

Pair Corralation between Vanguard and Series Portfolios

Given the investment horizon of 90 days Vanguard SP Small Cap is expected to generate 0.93 times more return on investment than Series Portfolios. However, Vanguard SP Small Cap is 1.07 times less risky than Series Portfolios. It trades about 0.21 of its potential returns per unit of risk. Series Portfolios Trust is currently generating about 0.19 per unit of risk. If you would invest  10,812  in Vanguard SP Small Cap on February 23, 2024 and sell it today you would earn a total of  416.00  from holding Vanguard SP Small Cap or generate 3.85% return on investment over 90 days.

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

Vanguard SP Small Cap  vs.  Series Portfolios Trust

Vanguard SP Small

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP Small Cap are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vanguard is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Series Portfolios Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Series Portfolios Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Series Portfolios is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vanguard and Series Portfolios

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

The idea behind Vanguard SP Small Cap and Series Portfolios Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.