Correlation Between Vanguard Value and The Fairholme
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and The Fairholme 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 Value and The Fairholme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and The Fairholme Fund, you can compare the effects of market volatilities on Vanguard Value and The Fairholme 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 Value with a short position of The Fairholme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and The Fairholme.
Diversification Opportunities for Vanguard Value and The Fairholme
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VANGUARD and The is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and The Fairholme Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Fairholme and Vanguard Value 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 Value Index are associated (or correlated) with The Fairholme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Fairholme has no effect on the direction of Vanguard Value i.e., Vanguard Value and The Fairholme go up and down completely randomly.
Pair Corralation between Vanguard Value and The Fairholme
Assuming the 90 days horizon Vanguard Value Index is expected to generate 0.4 times more return on investment than The Fairholme. However, Vanguard Value Index is 2.49 times less risky than The Fairholme. It trades about 0.13 of its potential returns per unit of risk. The Fairholme Fund is currently generating about 0.03 per unit of risk. If you would invest 5,265 in Vanguard Value Index on August 31, 2024 and sell it today you would earn a total of 1,825 from holding Vanguard Value Index or generate 34.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vanguard Value Index vs. The Fairholme Fund
Performance |
| Timeline |
| Vanguard Value Index |
| The Fairholme |
Vanguard Value and The Fairholme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and The Fairholme
The main advantage of trading using opposite Vanguard Value and The Fairholme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, The Fairholme 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 The Fairholme will offset losses from the drop in The Fairholme's long position.| Vanguard Value vs. Vanguard Value Index | Vanguard Value vs. Dodge Cox Stock | Vanguard Value vs. American Mutual Fund | Vanguard Value vs. American Funds American |
| The Fairholme vs. Dodge Cox Stock | The Fairholme vs. American Mutual Fund | The Fairholme vs. American Funds American | The Fairholme vs. American Funds American |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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