Correlation Between Vanguard Small-cap and Oak Ridge

Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Oak Ridge 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-cap and Oak Ridge 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 Oak Ridge Small, you can compare the effects of market volatilities on Vanguard Small-cap and Oak Ridge 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-cap with a short position of Oak Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Oak Ridge.

Diversification Opportunities for Vanguard Small-cap and Oak Ridge

0.99

Correlation Coefficient

Vanguard Small-cap  Oak Ridge

No risk reduction

The 3 months correlation between Vanguard and Oak is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Oak Ridge Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Small and Vanguard Small-cap 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Small has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Oak Ridge go up and down completely randomly.

Pair Corralation between Vanguard Small-cap and Oak Ridge

Assuming the 90 days horizon Vanguard Small Cap Index is expected to generate 0.95 times more return on investment than Oak Ridge. However, Vanguard Small Cap Index is 1.06 times less risky than Oak Ridge. It trades about 0.12 of its potential returns per unit of risk. Oak Ridge Small is currently generating about 0.11 per unit of risk. If you would invest  10,551  in Vanguard Small Cap Index on May 4, 2025 and sell it today you would earn a total of  835.00  from holding Vanguard Small Cap Index or generate 7.91% 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.  Oak Ridge Small

Vanguard Small Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Small-cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Oak Ridge Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Small are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vanguard Small-cap and Oak Ridge

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

The idea behind Vanguard Small Cap Index and Oak Ridge Small 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.