Correlation Between Intrepid Capital and Vanguard 500

Can any of the company-specific risk be diversified away by investing in both Intrepid Capital and Vanguard 500 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 Intrepid Capital and Vanguard 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intrepid Capital Fund and Vanguard 500 Index, you can compare the effects of market volatilities on Intrepid Capital and Vanguard 500 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 Intrepid Capital with a short position of Vanguard 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intrepid Capital and Vanguard 500.

Diversification Opportunities for Intrepid Capital and Vanguard 500

0.93

Correlation Coefficient

Intrepid Capital  Vanguard 500

Almost no diversification

The 3 months correlation between Intrepid and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Capital Fund and Vanguard 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 500 Index and Intrepid Capital 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 Intrepid Capital Fund are associated (or correlated) with Vanguard 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard 500 Index has no effect on the direction of Intrepid Capital i.e., Intrepid Capital and Vanguard 500 go up and down completely randomly.

Pair Corralation between Intrepid Capital and Vanguard 500

Assuming the 90 days horizon Intrepid Capital Fund is expected to generate 0.93 times more return on investment than Vanguard 500. However, Intrepid Capital Fund is 1.07 times less risky than Vanguard 500. It trades about 0.25 of its potential returns per unit of risk. Vanguard 500 Index is currently generating about 0.17 per unit of risk. If you would invest  1,272  in Intrepid Capital Fund on September 15, 2024 and sell it today you would earn a total of  33.00  from holding Intrepid Capital Fund or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Intrepid Capital Fund  vs.  Vanguard 500 Index

Intrepid Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Capital Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Intrepid Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vanguard 500 Index

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard 500 Index are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard 500 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intrepid Capital and Vanguard 500

The main advantage of trading using opposite Intrepid Capital and Vanguard 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intrepid Capital position performs unexpectedly, Vanguard 500 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 500 will offset losses from the drop in Vanguard 500's long position.

The idea behind Intrepid Capital Fund and Vanguard 500 Index 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.