Correlation Between Vanguard Growth and Jacob Small

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

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

Diversification Opportunities for Vanguard Growth and Jacob Small

0.91

Correlation Coefficient

Vanguard Growth  Jacob Small

Almost no diversification

The 3 months correlation between Vanguard and Jacob is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Jacob Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Small Cap and Vanguard Growth 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 Growth Index are associated (or correlated) with Jacob Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Small Cap has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Jacob Small go up and down completely randomly.

Pair Corralation between Vanguard Growth and Jacob Small

Assuming the 90 days horizon Vanguard Growth is expected to generate 1.55 times less return on investment than Jacob Small. But when comparing it to its historical volatility, Vanguard Growth Index is 1.97 times less risky than Jacob Small. It trades about 0.23 of its potential returns per unit of risk. Jacob Small Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,830  in Jacob Small Cap on September 13, 2024 and sell it today you would earn a total of  385.00  from holding Jacob Small Cap or generate 21.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Vanguard Growth Index  vs.  Jacob Small Cap

Vanguard Growth Index

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Jacob Small Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jacob Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Growth and Jacob Small

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

The idea behind Vanguard Growth Index and Jacob Small 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.