Correlation Between Vanguard Extended and Intrepid Income

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

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

Diversification Opportunities for Vanguard Extended and Intrepid Income

0.87

Correlation Coefficient

Vanguard Extended  Intrepid Income

Very poor diversification

The 3 months correlation between Vanguard and Intrepid is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Intrepid Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Income and Vanguard Extended 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 Extended Market are associated (or correlated) with Intrepid Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Income has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Intrepid Income go up and down completely randomly.

Pair Corralation between Vanguard Extended and Intrepid Income

Assuming the 90 days horizon Vanguard Extended Market is expected to under-perform the Intrepid Income. In addition to that, Vanguard Extended is 7.31 times more volatile than Intrepid Income Fund. It trades about -0.23 of its total potential returns per unit of risk. Intrepid Income Fund is currently generating about -0.07 per unit of volatility. If you would invest  908.00  in Intrepid Income Fund on September 25, 2024 and sell it today you would lose (2.00) from holding Intrepid Income Fund or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Vanguard Extended Market  vs.  Intrepid Income Fund

Vanguard Extended Market

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Extended Market are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Extended may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intrepid Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Income Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intrepid Income 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 Extended and Intrepid Income

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

The idea behind Vanguard Extended Market and Intrepid Income Fund 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.