Correlation Between Vanguard Total and Hamilton Lane

Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Hamilton Lane 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 Total and Hamilton Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Total Stock and Hamilton Lane Private, you can compare the effects of market volatilities on Vanguard Total and Hamilton Lane 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 Total with a short position of Hamilton Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Hamilton Lane.

Diversification Opportunities for Vanguard Total and Hamilton Lane

0.07

Correlation Coefficient

Vanguard Total  Hamilton Lane

Significant diversification

The 3 months correlation between Vanguard and Hamilton is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Hamilton Lane Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Lane Private and Vanguard Total 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 Total Stock are associated (or correlated) with Hamilton Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Lane Private has no effect on the direction of Vanguard Total i.e., Vanguard Total and Hamilton Lane go up and down completely randomly.

Pair Corralation between Vanguard Total and Hamilton Lane

Assuming the 90 days horizon Vanguard Total is expected to generate 46.71 times less return on investment than Hamilton Lane. But when comparing it to its historical volatility, Vanguard Total Stock is 6.79 times less risky than Hamilton Lane. It trades about 0.06 of its potential returns per unit of risk. Hamilton Lane Private is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  1,191  in Hamilton Lane Private on February 10, 2024 and sell it today you would earn a total of  381.00  from holding Hamilton Lane Private or generate 31.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.02%
Values	Daily Returns

Vanguard Total Stock  vs.  Hamilton Lane Private

Vanguard Total Stock

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hamilton Lane Private

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hamilton Lane Private has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Hamilton Lane is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Hamilton Lane

The main advantage of trading using opposite Vanguard Total and Hamilton Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Hamilton Lane 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 Hamilton Lane will offset losses from the drop in Hamilton Lane's long position.

The idea behind Vanguard Total Stock and Hamilton Lane Private pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.