Correlation Between Vanguard Windsor and Highland Small-cap
Can any of the company-specific risk be diversified away by investing in both Vanguard Windsor and Highland Small-cap 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 Windsor and Highland Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Windsor Fund and Highland Small Cap Equity, you can compare the effects of market volatilities on Vanguard Windsor and Highland Small-cap 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 Windsor with a short position of Highland Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Windsor and Highland Small-cap.
Diversification Opportunities for Vanguard Windsor and Highland Small-cap
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VANGUARD and Highland is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Windsor Fund and Highland Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Small Cap and Vanguard Windsor 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 Windsor Fund are associated (or correlated) with Highland Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Small Cap has no effect on the direction of Vanguard Windsor i.e., Vanguard Windsor and Highland Small-cap go up and down completely randomly.
Pair Corralation between Vanguard Windsor and Highland Small-cap
Assuming the 90 days horizon Vanguard Windsor Fund is expected to generate 0.74 times more return on investment than Highland Small-cap. However, Vanguard Windsor Fund is 1.34 times less risky than Highland Small-cap. It trades about 0.11 of its potential returns per unit of risk. Highland Small Cap Equity is currently generating about 0.04 per unit of risk. If you would invest 2,044 in Vanguard Windsor Fund on September 4, 2024 and sell it today you would earn a total of 432.00 from holding Vanguard Windsor Fund or generate 21.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Windsor Fund vs. Highland Small Cap Equity
Performance |
| Timeline |
| Vanguard Windsor |
| Highland Small Cap |
Vanguard Windsor and Highland Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Windsor and Highland Small-cap
The main advantage of trading using opposite Vanguard Windsor and Highland Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Windsor position performs unexpectedly, Highland Small-cap 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 Highland Small-cap will offset losses from the drop in Highland Small-cap's long position.| Vanguard Windsor vs. Vanguard Explorer Fund | Vanguard Windsor vs. Vanguard Primecap Fund | Vanguard Windsor vs. Vanguard Wellington Fund | Vanguard Windsor vs. Vanguard Windsor Ii |
| Highland Small-cap vs. Americafirst Large Cap | Highland Small-cap vs. Jhancock Disciplined Value | Highland Small-cap vs. Vanguard Windsor Fund | Highland Small-cap vs. Avantis Large Cap |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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