Correlation Between Vanguard and New Hampshire
Can any of the company-specific risk be diversified away by investing in both Vanguard and New Hampshire 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 and New Hampshire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and New Hampshire Higher, you can compare the effects of market volatilities on Vanguard and New Hampshire 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 with a short position of New Hampshire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and New Hampshire.
Diversification Opportunities for Vanguard and New Hampshire
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and New is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and New Hampshire Higher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hampshire Higher and Vanguard 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 SP 500 are associated (or correlated) with New Hampshire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hampshire Higher has no effect on the direction of Vanguard i.e., Vanguard and New Hampshire go up and down completely randomly.
Pair Corralation between Vanguard and New Hampshire
Considering the 90-day investment horizon Vanguard SP 500 is expected to under-perform the New Hampshire. In addition to that, Vanguard is 1.5 times more volatile than New Hampshire Higher. It trades about -0.15 of its total potential returns per unit of risk. New Hampshire Higher is currently generating about -0.18 per unit of volatility. If you would invest 1,986 in New Hampshire Higher on January 26, 2024 and sell it today you would lose (39.00) from holding New Hampshire Higher or give up 1.96% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard SP 500 vs. New Hampshire Higher
Performance |
Timeline |
Vanguard SP 500 |
New Hampshire Higher |
Vanguard and New Hampshire Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard and New Hampshire
The main advantage of trading using opposite Vanguard and New Hampshire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, New Hampshire 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 New Hampshire will offset losses from the drop in New Hampshire's long position.Vanguard vs. SPDR MSCI EAFE | Vanguard vs. SPDR MSCI Emerging | Vanguard vs. SPDR Russell 1000 | Vanguard vs. SPDR Russell 1000 |
New Hampshire vs. Vanguard Total Stock | New Hampshire vs. Vanguard 500 Index | New Hampshire vs. Vanguard Total Stock | New Hampshire vs. Vanguard Total Stock |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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