Correlation Between Sound Shore and Vanguard Value
Can any of the company-specific risk be diversified away by investing in both Sound Shore and Vanguard Value 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 Sound Shore and Vanguard Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Shore Fund and Vanguard Value Index, you can compare the effects of market volatilities on Sound Shore and Vanguard Value 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 Sound Shore with a short position of Vanguard Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Shore and Vanguard Value.
Diversification Opportunities for Sound Shore and Vanguard Value
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sound and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Sound Shore Fund and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index and Sound Shore 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 Sound Shore Fund are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of Sound Shore i.e., Sound Shore and Vanguard Value go up and down completely randomly.
Pair Corralation between Sound Shore and Vanguard Value
Assuming the 90 days horizon Sound Shore Fund is expected to under-perform the Vanguard Value. In addition to that, Sound Shore is 1.12 times more volatile than Vanguard Value Index. It trades about -0.09 of its total potential returns per unit of risk. Vanguard Value Index is currently generating about -0.07 per unit of volatility. If you would invest 6,242 in Vanguard Value Index on January 26, 2024 and sell it today you would lose (68.00) from holding Vanguard Value Index or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sound Shore Fund vs. Vanguard Value Index
Performance |
| Timeline |
| Sound Shore Fund |
| Vanguard Value Index |
Sound Shore and Vanguard Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Shore and Vanguard Value
The main advantage of trading using opposite Sound Shore and Vanguard Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Shore position performs unexpectedly, Vanguard Value 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 Vanguard Value will offset losses from the drop in Vanguard Value's long position.| Sound Shore vs. Edgewood Growth Fund | Sound Shore vs. Hartford Schroders Emerging | Sound Shore vs. HUMANA INC | Sound Shore vs. Aquagold International |
| Vanguard Value vs. Edgewood Growth Fund | Vanguard Value vs. Hartford Schroders Emerging | Vanguard Value vs. HUMANA INC | Vanguard Value vs. Aquagold International |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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