Correlation Between Smallcap World and Vulcan Value
Can any of the company-specific risk be diversified away by investing in both Smallcap World and Vulcan Value 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 Smallcap World and Vulcan Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and Vulcan Value Partners, you can compare the effects of market volatilities on Smallcap World and Vulcan Value 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 Smallcap World with a short position of Vulcan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Vulcan Value.
Diversification Opportunities for Smallcap World and Vulcan Value
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Vulcan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners and Smallcap World 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 Smallcap World Fund are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of Smallcap World i.e., Smallcap World and Vulcan Value go up and down completely randomly.
Pair Corralation between Smallcap World and Vulcan Value
Assuming the 90 days horizon Smallcap World is expected to generate 1.18 times less return on investment than Vulcan Value. But when comparing it to its historical volatility, Smallcap World Fund is 1.47 times less risky than Vulcan Value. It trades about 0.16 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,183 in Vulcan Value Partners on June 3, 2025 and sell it today you would earn a total of 108.00 from holding Vulcan Value Partners or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap World Fund vs. Vulcan Value Partners
Performance |
| Timeline |
| Smallcap World |
| Vulcan Value Partners |
Smallcap World and Vulcan Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and Vulcan Value
The main advantage of trading using opposite Smallcap World and Vulcan Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World position performs unexpectedly, Vulcan Value 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 Vulcan Value will offset losses from the drop in Vulcan Value's long position.| Smallcap World vs. Foundry Partners Fundamental | Smallcap World vs. Vanguard Small Cap Value | Smallcap World vs. Small Cap Value Fund | Smallcap World vs. Ultrasmall Cap Profund Ultrasmall Cap |
| Vulcan Value vs. Vulcan Value Partners | Vulcan Value vs. Vulcan Value Partners | Vulcan Value vs. Vulcan Value Partners | Vulcan Value vs. Allianzgi Technology Fund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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