Correlation Between Vanguard Balanced and Hussman Strategic

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

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

Diversification Opportunities for Vanguard Balanced and Hussman Strategic

-0.46

Correlation Coefficient

Vanguard Balanced  Hussman Strategic

Very good diversification

The 3 months correlation between Vanguard and Hussman is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Balanced Index and Hussman Strategic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hussman Strategic Growth and Vanguard Balanced 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 Balanced Index are associated (or correlated) with Hussman Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hussman Strategic Growth has no effect on the direction of Vanguard Balanced i.e., Vanguard Balanced and Hussman Strategic go up and down completely randomly.

Pair Corralation between Vanguard Balanced and Hussman Strategic

Assuming the 90 days horizon Vanguard Balanced Index is expected to under-perform the Hussman Strategic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Balanced Index is 1.68 times less risky than Hussman Strategic. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Hussman Strategic Growth is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  554.00  in Hussman Strategic Growth on October 10, 2024 and sell it today you would lose (4.00) from holding Hussman Strategic Growth or give up 0.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vanguard Balanced Index  vs.  Hussman Strategic Growth

Vanguard Balanced Index

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Balanced Index are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hussman Strategic Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hussman Strategic Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Hussman Strategic 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 Balanced and Hussman Strategic

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

The idea behind Vanguard Balanced Index and Hussman Strategic Growth 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.