Correlation Between Vanguard Small and Oakhurst Strategic

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

By analyzing existing cross correlation between Vanguard Small Cap Index and Oakhurst Strategic Defined, you can compare the effects of market volatilities on Vanguard Small and Oakhurst Strategic 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 Oakhurst Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Oakhurst Strategic.

Diversification Opportunities for Vanguard Small and Oakhurst Strategic

0.95

Correlation Coefficient

Vanguard Small  Oakhurst Strategic

Almost no diversification

The 3 months correlation between Vanguard and Oakhurst is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Oakhurst Strategic Defined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakhurst Strategic 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 Index are associated (or correlated) with Oakhurst Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakhurst Strategic has no effect on the direction of Vanguard Small i.e., Vanguard Small and Oakhurst Strategic go up and down completely randomly.

Pair Corralation between Vanguard Small and Oakhurst Strategic

Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 2.05 times more return on investment than Oakhurst Strategic. However, Vanguard Small is 2.05 times more volatile than Oakhurst Strategic Defined. It trades about 0.06 of its potential returns per unit of risk. Oakhurst Strategic Defined is currently generating about 0.12 per unit of risk. If you would invest  8,513  in Vanguard Small Cap Index on September 21, 2024 and sell it today you would earn a total of  3,032  from holding Vanguard Small Cap Index or generate 35.62% return on investment over 90 days.

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

Vanguard Small Cap Index  vs.  Oakhurst Strategic Defined

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.

Oakhurst Strategic

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakhurst Strategic Defined are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Oakhurst Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Small and Oakhurst Strategic

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

The idea behind Vanguard Small Cap Index and Oakhurst Strategic Defined 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.