Correlation Between Dimensional Core and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Dimensional Core 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 Dimensional Core and Vanguard Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Core Equity and Vanguard Small Cap Growth, you can compare the effects of market volatilities on Dimensional Core 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 Dimensional Core with a short position of Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and Vanguard Small.
Diversification Opportunities for Dimensional Core and Vanguard Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and Vanguard Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Dimensional Core 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 Dimensional Core Equity 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 Dimensional Core i.e., Dimensional Core and Vanguard Small go up and down completely randomly.
Pair Corralation between Dimensional Core and Vanguard Small
Given the investment horizon of 90 days Dimensional Core is expected to generate 1.42 times less return on investment than Vanguard Small. But when comparing it to its historical volatility, Dimensional Core Equity is 1.6 times less risky than Vanguard Small. It trades about 0.12 of its potential returns per unit of risk. Vanguard Small Cap Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 27,771 in Vanguard Small Cap Growth on August 10, 2025 and sell it today you would earn a total of 2,106 from holding Vanguard Small Cap Growth or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Core Equity vs. Vanguard Small Cap Growth
Performance |
| Timeline |
| Dimensional Core Equity |
| Vanguard Small Cap |
Dimensional Core and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and Vanguard Small
The main advantage of trading using opposite Dimensional Core and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core 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.| Dimensional Core vs. iShares SP 500 | Dimensional Core vs. Vanguard Small Cap Growth | Dimensional Core vs. SPDR Dow Jones | Dimensional Core vs. Schwab Broad Market |
| Vanguard Small vs. Vanguard Small Cap Growth | Vanguard Small vs. Vanguard Mid Cap Growth | Vanguard Small vs. Vanguard Mid Cap Growth | Vanguard Small vs. Vanguard Mid Cap Value |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |