Correlation Between Vanguard Mid-cap and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap 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 Mid-cap 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 Mid Cap Value and Hotchkis Wiley Mid Cap, you can compare the effects of market volatilities on Vanguard Mid-cap 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 Mid-cap with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Hotchkis Wiley.
Diversification Opportunities for Vanguard Mid-cap and Hotchkis Wiley
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Hotchkis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and Hotchkis Wiley Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Mid and Vanguard Mid-cap 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 Mid Cap Value 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 Mid has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Hotchkis Wiley
Assuming the 90 days horizon Vanguard Mid-cap is expected to generate 1.07 times less return on investment than Hotchkis Wiley. But when comparing it to its historical volatility, Vanguard Mid Cap Value is 1.42 times less risky than Hotchkis Wiley. It trades about 0.07 of its potential returns per unit of risk. Hotchkis Wiley Mid Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,537 in Hotchkis Wiley Mid Cap on August 24, 2024 and sell it today you would earn a total of 1,339 from holding Hotchkis Wiley Mid Cap or generate 29.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Value vs. Hotchkis Wiley Mid Cap
Performance |
| Timeline |
| Vanguard Mid Cap |
| Hotchkis Wiley Mid |
Vanguard Mid-cap and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Hotchkis Wiley
The main advantage of trading using opposite Vanguard Mid-cap and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap 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 Mid-cap vs. Rbc Bluebay Emerging | Vanguard Mid-cap vs. Artisan Emerging Markets | Vanguard Mid-cap vs. Black Oak Emerging | Vanguard Mid-cap vs. Pnc Emerging Markets |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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