Correlation Between Vanguard Total and Hennessy Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Hennessy Small 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 Total and Hennessy Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total International and Hennessy Small Cap, you can compare the effects of market volatilities on Vanguard Total and Hennessy Small 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 Total with a short position of Hennessy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Hennessy Small.
Diversification Opportunities for Vanguard Total and Hennessy Small
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Hennessy is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Hennessy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Small Cap and Vanguard Total 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 Total International are associated (or correlated) with Hennessy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Small Cap has no effect on the direction of Vanguard Total i.e., Vanguard Total and Hennessy Small go up and down completely randomly.
Pair Corralation between Vanguard Total and Hennessy Small
Assuming the 90 days horizon Vanguard Total International is expected to generate 0.56 times more return on investment than Hennessy Small. However, Vanguard Total International is 1.79 times less risky than Hennessy Small. It trades about 0.38 of its potential returns per unit of risk. Hennessy Small Cap is currently generating about 0.13 per unit of risk. If you would invest 3,197 in Vanguard Total International on November 18, 2024 and sell it today you would earn a total of 176.00 from holding Vanguard Total International or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total International vs. Hennessy Small Cap
Performance |
| Timeline |
| Vanguard Total Inter |
| Hennessy Small Cap |
Vanguard Total and Hennessy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Hennessy Small
The main advantage of trading using opposite Vanguard Total and Hennessy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Hennessy Small 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 Hennessy Small will offset losses from the drop in Hennessy Small's long position.| Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Small Cap Index |
| Hennessy Small vs. Blackrock Government Bond | Hennessy Small vs. Inverse Government Long | Hennessy Small vs. Us Government Securities | Hennessy Small vs. Intermediate Government Bond |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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