Correlation Between Vanguard Health and Hotchkis Wiley

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

By analyzing existing cross correlation between Vanguard Health Care and Hotchkis Wiley Diversified, you can compare the effects of market volatilities on Vanguard Health and Hotchkis Wiley 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 Health with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Hotchkis Wiley.

Diversification Opportunities for Vanguard Health and Hotchkis Wiley

-0.26

Correlation Coefficient

Vanguard Health  Hotchkis Wiley

Very good diversification

The 3 months correlation between Vanguard and Hotchkis is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Hotchkis Wiley Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Diver and Vanguard Health 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 Health Care are associated (or correlated) with Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Diver has no effect on the direction of Vanguard Health i.e., Vanguard Health and Hotchkis Wiley go up and down completely randomly.

Pair Corralation between Vanguard Health and Hotchkis Wiley

Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Hotchkis Wiley. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Health Care is 2.28 times less risky than Hotchkis Wiley. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Hotchkis Wiley Diversified is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,179  in Hotchkis Wiley Diversified on September 13, 2024 and sell it today you would lose (220.00) from holding Hotchkis Wiley Diversified or give up 6.92% of portfolio value over 90 days.

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

Vanguard Health Care  vs.  Hotchkis Wiley Diversified

Vanguard Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hotchkis Wiley Diver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotchkis Wiley Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Hotchkis Wiley 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 Health and Hotchkis Wiley

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

The idea behind Vanguard Health Care and Hotchkis Wiley Diversified 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.