Correlation Between Lsv Small and Vanguard Lifestrategy

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

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

Diversification Opportunities for Lsv Small and Vanguard Lifestrategy

0.74

Correlation Coefficient

Lsv Small  Vanguard Lifestrategy

Poor diversification

The 3 months correlation between Lsv and Vanguard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Vanguard Lifestrategy Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Lifestrategy and Lsv 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 Lsv Small Cap are associated (or correlated) with Vanguard Lifestrategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Lifestrategy has no effect on the direction of Lsv Small i.e., Lsv Small and Vanguard Lifestrategy go up and down completely randomly.

Pair Corralation between Lsv Small and Vanguard Lifestrategy

Assuming the 90 days horizon Lsv Small is expected to generate 1.25 times less return on investment than Vanguard Lifestrategy. In addition to that, Lsv Small is 2.07 times more volatile than Vanguard Lifestrategy Growth. It trades about 0.08 of its total potential returns per unit of risk. Vanguard Lifestrategy Growth is currently generating about 0.22 per unit of volatility. If you would invest  4,451  in Vanguard Lifestrategy Growth on May 5, 2025 and sell it today you would earn a total of  328.00  from holding Vanguard Lifestrategy Growth or generate 7.37% return on investment over 90 days.

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

Lsv Small Cap  vs.  Vanguard Lifestrategy Growth

Lsv Small Cap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lsv Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Lifestrategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Lifestrategy Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vanguard Lifestrategy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Lsv Small and Vanguard Lifestrategy

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

The idea behind Lsv Small Cap and Vanguard Lifestrategy Growth 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.