Correlation Between Cliffwater Corporate and Vanguard Small

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

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

Diversification Opportunities for Cliffwater Corporate and Vanguard Small

0.82

Correlation Coefficient

Cliffwater Corporate  Vanguard Small

Very poor diversification

The 3 months correlation between Cliffwater and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cliffwater Corporate Lending and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Cliffwater Corporate 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 Cliffwater Corporate Lending are associated (or correlated) with Vanguard Small. 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 has no effect on the direction of Cliffwater Corporate i.e., Cliffwater Corporate and Vanguard Small go up and down completely randomly.

Pair Corralation between Cliffwater Corporate and Vanguard Small

Assuming the 90 days horizon Cliffwater Corporate Lending is expected to generate 0.05 times more return on investment than Vanguard Small. However, Cliffwater Corporate Lending is 20.63 times less risky than Vanguard Small. It trades about 0.73 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.03 per unit of risk. If you would invest  1,062  in Cliffwater Corporate Lending on September 22, 2024 and sell it today you would earn a total of  26.00  from holding Cliffwater Corporate Lending or generate 2.45% return on investment over 90 days.

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

Cliffwater Corporate Lending  vs.  Vanguard Small Cap Index

Cliffwater Corporate

Risk-Adjusted Performance

57 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cliffwater Corporate Lending are ranked lower than 57 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Cliffwater Corporate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Small Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cliffwater Corporate and Vanguard Small

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

The idea behind Cliffwater Corporate Lending and Vanguard Small Cap Index 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..