Correlation Between Stone Harbor and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Stone Harbor and Vanguard Total 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 Stone Harbor and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Harbor Emerging and Vanguard Total Stock, you can compare the effects of market volatilities on Stone Harbor and Vanguard Total 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 Stone Harbor with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Harbor and Vanguard Total.
Diversification Opportunities for Stone Harbor and Vanguard Total
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stone and Vanguard is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Stone Harbor 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 Stone Harbor Emerging are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Stone Harbor i.e., Stone Harbor and Vanguard Total go up and down completely randomly.
Pair Corralation between Stone Harbor and Vanguard Total
Assuming the 90 days horizon Stone Harbor Emerging is expected to under-perform the Vanguard Total. But the mutual fund apears to be less risky and, when comparing its historical volatility, Stone Harbor Emerging is 1.19 times less risky than Vanguard Total. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Vanguard Total Stock is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 19,420 in Vanguard Total Stock on January 16, 2024 and sell it today you would earn a total of 4,520 from holding Vanguard Total Stock or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.04% |
| Values | Daily Returns |
Stone Harbor Emerging vs. Vanguard Total Stock
Performance |
| Timeline |
| Stone Harbor Emerging |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vanguard Total Stock |
Stone Harbor and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Harbor and Vanguard Total
The main advantage of trading using opposite Stone Harbor and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Harbor position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| Stone Harbor vs. Huber Capital Diversified | Stone Harbor vs. Conservative Balanced Allocation | Stone Harbor vs. Lord Abbett Diversified | Stone Harbor vs. Pgim Jennison Diversified |
| Vanguard Total vs. Vanguard Global Esg | Vanguard Total vs. Vanguard ESG Stock | Vanguard Total vs. Vanguard Mid Cap Value | Vanguard Total vs. Vanguard Dividend Appreciation |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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