Correlation Between Vanguard 500 and Intrepid Capital
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Intrepid Capital 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 Intrepid Capital 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 Intrepid Capital Fund, you can compare the effects of market volatilities on Vanguard 500 and Intrepid Capital 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 Intrepid Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Intrepid Capital.
Diversification Opportunities for Vanguard 500 and Intrepid Capital
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Intrepid is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Intrepid Capital Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Capital 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 Intrepid Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Capital has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Intrepid Capital go up and down completely randomly.
Pair Corralation between Vanguard 500 and Intrepid Capital
Assuming the 90 days horizon Vanguard 500 Index is expected to generate 1.85 times more return on investment than Intrepid Capital. However, Vanguard 500 is 1.85 times more volatile than Intrepid Capital Fund. It trades about 0.21 of its potential returns per unit of risk. Intrepid Capital Fund is currently generating about 0.29 per unit of risk. If you would invest 54,157 in Vanguard 500 Index on November 2, 2024 and sell it today you would earn a total of 1,908 from holding Vanguard 500 Index or generate 3.52% 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. Intrepid Capital Fund
Performance |
| Timeline |
| Vanguard 500 Index |
| Intrepid Capital |
Vanguard 500 and Intrepid Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Intrepid Capital
The main advantage of trading using opposite Vanguard 500 and Intrepid Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Intrepid Capital 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 Intrepid Capital will offset losses from the drop in Intrepid Capital'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 |
| Intrepid Capital vs. James Balanced Golden | Intrepid Capital vs. Greenspring Fund Retail | Intrepid Capital vs. Berwyn Income Fund | Intrepid Capital vs. Villere Balanced Fund |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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