Correlation Between HCM Defender and Vanguard
Can any of the company-specific risk be diversified away by investing in both HCM Defender and Vanguard 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 HCM Defender and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCM Defender 500 and Vanguard SP 500, you can compare the effects of market volatilities on HCM Defender and Vanguard 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 HCM Defender with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCM Defender and Vanguard.
Diversification Opportunities for HCM Defender and Vanguard
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HCM and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding HCM Defender 500 and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and HCM Defender 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 HCM Defender 500 are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of HCM Defender i.e., HCM Defender and Vanguard go up and down completely randomly.
Pair Corralation between HCM Defender and Vanguard
Considering the 90-day investment horizon HCM Defender 500 is expected to generate 1.41 times more return on investment than Vanguard. However, HCM Defender is 1.41 times more volatile than Vanguard SP 500. It trades about 0.2 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.21 per unit of risk. If you would invest 4,889 in HCM Defender 500 on September 12, 2024 and sell it today you would earn a total of 592.00 from holding HCM Defender 500 or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCM Defender 500 vs. Vanguard SP 500
Performance |
| Timeline |
| HCM Defender 500 |
| Vanguard SP 500 |
HCM Defender and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCM Defender and Vanguard
The main advantage of trading using opposite HCM Defender and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCM Defender position performs unexpectedly, Vanguard 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 will offset losses from the drop in Vanguard's long position.| HCM Defender vs. Vanguard SP 500 | HCM Defender vs. Vanguard Real Estate | HCM Defender vs. Vanguard Total Bond | HCM Defender vs. Vanguard High Dividend |
| Vanguard vs. Vanguard Total Stock | Vanguard vs. Vanguard High Dividend | Vanguard vs. Vanguard Information Technology | Vanguard vs. Invesco QQQ Trust |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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