Correlation Between Vanguard Small-cap and Bedford Metals
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Bedford Metals 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-cap and Bedford Metals 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 Bedford Metals Corp, you can compare the effects of market volatilities on Vanguard Small-cap and Bedford Metals 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-cap with a short position of Bedford Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Bedford Metals.
Diversification Opportunities for Vanguard Small-cap and Bedford Metals
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Bedford is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Bedford Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bedford Metals Corp and Vanguard Small-cap 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 Bedford Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bedford Metals Corp has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Bedford Metals go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Bedford Metals
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 11.35 times less return on investment than Bedford Metals. But when comparing it to its historical volatility, Vanguard Small Cap Value is 7.01 times less risky than Bedford Metals. It trades about 0.06 of its potential returns per unit of risk. Bedford Metals Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8.18 in Bedford Metals Corp on July 9, 2024 and sell it today you would earn a total of 69.82 from holding Bedford Metals Corp or generate 853.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Vanguard Small Cap Value vs. Bedford Metals Corp
Performance |
Timeline |
Vanguard Small Cap |
Bedford Metals Corp |
Vanguard Small-cap and Bedford Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Small-cap and Bedford Metals
The main advantage of trading using opposite Vanguard Small-cap and Bedford Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Bedford Metals 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 Bedford Metals will offset losses from the drop in Bedford Metals' long position.Vanguard Small-cap vs. Strategic Allocation Moderate | Vanguard Small-cap vs. Saat Moderate Strategy | Vanguard Small-cap vs. Franklin Lifesmart Retirement | Vanguard Small-cap vs. Voya Target Retirement |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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