Correlation Between Vaughan Nelson and Cambiar Opportunity
Can any of the company-specific risk be diversified away by investing in both Vaughan Nelson and Cambiar Opportunity 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 Vaughan Nelson and Cambiar Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vaughan Nelson Small and Cambiar Opportunity Fund, you can compare the effects of market volatilities on Vaughan Nelson and Cambiar Opportunity 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 Vaughan Nelson with a short position of Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaughan Nelson and Cambiar Opportunity.
Diversification Opportunities for Vaughan Nelson and Cambiar Opportunity
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vaughan and Cambiar is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vaughan Nelson Small and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity and Vaughan Nelson 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 Vaughan Nelson Small are associated (or correlated) with Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of Vaughan Nelson i.e., Vaughan Nelson and Cambiar Opportunity go up and down completely randomly.
Pair Corralation between Vaughan Nelson and Cambiar Opportunity
Assuming the 90 days horizon Vaughan Nelson Small is expected to generate 1.46 times more return on investment than Cambiar Opportunity. However, Vaughan Nelson is 1.46 times more volatile than Cambiar Opportunity Fund. It trades about 0.1 of its potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.1 per unit of risk. If you would invest 1,588 in Vaughan Nelson Small on September 4, 2024 and sell it today you would earn a total of 569.00 from holding Vaughan Nelson Small or generate 35.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vaughan Nelson Small vs. Cambiar Opportunity Fund
Performance |
| Timeline |
| Vaughan Nelson Small |
| Cambiar Opportunity |
Vaughan Nelson and Cambiar Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vaughan Nelson and Cambiar Opportunity
The main advantage of trading using opposite Vaughan Nelson and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaughan Nelson position performs unexpectedly, Cambiar Opportunity 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 Cambiar Opportunity will offset losses from the drop in Cambiar Opportunity's long position.| Vaughan Nelson vs. Natixis Equity Opportunities | Vaughan Nelson vs. Natixis Oakmark Fund | Vaughan Nelson vs. Vaughan Nelson Small | Vaughan Nelson vs. Loomis Sayles Growth |
| Cambiar Opportunity vs. Cambiar International Equity | Cambiar Opportunity vs. Cambiar Small Cap | Cambiar Opportunity vs. Cambiar Smid Fund | Cambiar Opportunity vs. Cambiar Small Cap |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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