Correlation Between Vanguard 500 and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Hotchkis Wiley 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 500 and Hotchkis Wiley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Hotchkis Wiley Value, you can compare the effects of market volatilities on Vanguard 500 and Hotchkis Wiley 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 500 with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Hotchkis Wiley.
Diversification Opportunities for Vanguard 500 and Hotchkis Wiley
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VANGUARD and Hotchkis is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Hotchkis Wiley Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Value and Vanguard 500 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 500 Index are associated (or correlated) with Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Value has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between Vanguard 500 and Hotchkis Wiley
Assuming the 90 days horizon Vanguard 500 is expected to generate 1.88 times less return on investment than Hotchkis Wiley. But when comparing it to its historical volatility, Vanguard 500 Index is 1.0 times less risky than Hotchkis Wiley. It trades about 0.15 of its potential returns per unit of risk. Hotchkis Wiley Value is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,103 in Hotchkis Wiley Value on August 28, 2024 and sell it today you would earn a total of 208.00 from holding Hotchkis Wiley Value or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Hotchkis Wiley Value
Performance |
| Timeline |
| Vanguard 500 Index |
| Hotchkis Wiley Value |
Vanguard 500 and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Hotchkis Wiley
The main advantage of trading using opposite Vanguard 500 and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
| Hotchkis Wiley vs. Hw Opportunities Mp | Hotchkis Wiley vs. Hotchkis Wiley Diversified | Hotchkis Wiley vs. Hotchkis Wiley Global | Hotchkis Wiley vs. Hotchkis Wiley High |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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