Correlation Between Vanguard Explorer and Ubs Small

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

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

Diversification Opportunities for Vanguard Explorer and Ubs Small

0.49

Correlation Coefficient

Vanguard Explorer  Ubs Small

Very weak diversification

The 3 months correlation between Vanguard and Ubs is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Ubs Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Small Cap and Vanguard Explorer 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 Explorer Fund are associated (or correlated) with Ubs Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Small Cap has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Ubs Small go up and down completely randomly.

Pair Corralation between Vanguard Explorer and Ubs Small

Assuming the 90 days horizon Vanguard Explorer Fund is expected to generate 0.83 times more return on investment than Ubs Small. However, Vanguard Explorer Fund is 1.21 times less risky than Ubs Small. It trades about 0.04 of its potential returns per unit of risk. Ubs Small Cap is currently generating about 0.02 per unit of risk. If you would invest  9,033  in Vanguard Explorer Fund on May 1, 2025 and sell it today you would earn a total of  1,753  from holding Vanguard Explorer Fund or generate 19.41% return on investment over 90 days.

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

Vanguard Explorer Fund  vs.  Ubs Small Cap

Vanguard Explorer

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Explorer Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Explorer may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Ubs Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ubs Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Ubs Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Explorer and Ubs Small

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

The idea behind Vanguard Explorer Fund and Ubs Small Cap 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.