Correlation Between Vanguard High and HCM Defender
Can any of the company-specific risk be diversified away by investing in both Vanguard High and HCM Defender 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 High and HCM Defender into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard High Dividend and HCM Defender 500, you can compare the effects of market volatilities on Vanguard High and HCM Defender 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 High with a short position of HCM Defender. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High and HCM Defender.
Diversification Opportunities for Vanguard High and HCM Defender
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and HCM is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Dividend and HCM Defender 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM Defender 500 and Vanguard High 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 High Dividend are associated (or correlated) with HCM Defender. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM Defender 500 has no effect on the direction of Vanguard High i.e., Vanguard High and HCM Defender go up and down completely randomly.
Pair Corralation between Vanguard High and HCM Defender
Considering the 90-day investment horizon Vanguard High Dividend is expected to under-perform the HCM Defender. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard High Dividend is 1.54 times less risky than HCM Defender. The etf trades about -0.08 of its potential returns per unit of risk. The HCM Defender 500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,354 in HCM Defender 500 on September 14, 2024 and sell it today you would earn a total of 90.00 from holding HCM Defender 500 or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard High Dividend vs. HCM Defender 500
Performance |
| Timeline |
| Vanguard High Dividend |
| HCM Defender 500 |
Vanguard High and HCM Defender Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High and HCM Defender
The main advantage of trading using opposite Vanguard High and HCM Defender positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High position performs unexpectedly, HCM Defender 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 HCM Defender will offset losses from the drop in HCM Defender's long position.| Vanguard High vs. Vanguard Dividend Appreciation | Vanguard High vs. Schwab Dividend Equity | Vanguard High vs. Vanguard Real Estate | Vanguard High vs. Vanguard Total Stock |
| HCM Defender vs. HCM Defender 100 | HCM Defender vs. Overlay Shares Large | HCM Defender vs. VanEck LongFlat Trend | HCM Defender vs. LeaderSharesTM AlphaFactor Core |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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