Correlation Between Vanguard Small and Msvif Growth

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

Diversification Opportunities for Vanguard Small and Msvif Growth

0.77

Correlation Coefficient

Vanguard Small  Msvif Growth

Poor diversification

The 3 months correlation between Vanguard and Msvif is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Msvif Growth Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Msvif Growth Port 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 Msvif Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Msvif Growth Port has no effect on the direction of Vanguard Small i.e., Vanguard Small and Msvif Growth go up and down completely randomly.

Pair Corralation between Vanguard Small and Msvif Growth

Assuming the 90 days horizon Vanguard Small is expected to generate 89.92 times less return on investment than Msvif Growth. But when comparing it to its historical volatility, Vanguard Small Cap Value is 1.73 times less risky than Msvif Growth. It trades about 0.0 of its potential returns per unit of risk. Msvif Growth Port is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,532  in Msvif Growth Port on September 22, 2024 and sell it today you would earn a total of  509.00  from holding Msvif Growth Port or generate 33.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Vanguard Small Cap Value  vs.  Msvif Growth Port

Vanguard Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Msvif Growth Port

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Msvif Growth Port are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Msvif Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Small and Msvif Growth

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

The idea behind Vanguard Small Cap Value and Msvif Growth Port 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.