Correlation Between Vanguard Small and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both Vanguard Small 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 Small 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 Small Cap Value and Hotchkis Wiley Small, you can compare the effects of market volatilities on Vanguard Small 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 Small with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Hotchkis Wiley.
Diversification Opportunities for Vanguard Small and Hotchkis Wiley
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Hotchkis is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Hotchkis Wiley Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Small and Vanguard Small 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 Small 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 Small has no effect on the direction of Vanguard Small i.e., Vanguard Small and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between Vanguard Small and Hotchkis Wiley
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 0.79 times more return on investment than Hotchkis Wiley. However, Vanguard Small Cap Value is 1.26 times less risky than Hotchkis Wiley. It trades about 0.11 of its potential returns per unit of risk. Hotchkis Wiley Small is currently generating about 0.07 per unit of risk. If you would invest 3,982 in Vanguard Small Cap Value on September 2, 2024 and sell it today you would earn a total of 1,204 from holding Vanguard Small Cap Value or generate 30.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Hotchkis Wiley Small
Performance |
| Timeline |
| Vanguard Small Cap |
| Hotchkis Wiley Small |
Vanguard Small and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Hotchkis Wiley
The main advantage of trading using opposite Vanguard Small and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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 Small vs. Tax Managed Mid Small | Vanguard Small vs. Delaware Limited Term Diversified | Vanguard Small vs. American Century Diversified | Vanguard Small vs. Lord Abbett Diversified |
| Hotchkis Wiley vs. Hw Opportunities Mp | Hotchkis Wiley vs. Hotchkis Wiley Value | Hotchkis Wiley vs. Hotchkis Wiley Value | Hotchkis Wiley vs. Hotchkis Wiley Value |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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