Correlation Between Vanguard Value and Clarkston Fund

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

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

Diversification Opportunities for Vanguard Value and Clarkston Fund

0.92

Correlation Coefficient

Vanguard Value  Clarkston Fund

Almost no diversification

The 3 months correlation between VANGUARD and Clarkston is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Clarkston Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Fund Insti and Vanguard Value 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 Value Index are associated (or correlated) with Clarkston Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Fund Insti has no effect on the direction of Vanguard Value i.e., Vanguard Value and Clarkston Fund go up and down completely randomly.

Pair Corralation between Vanguard Value and Clarkston Fund

Assuming the 90 days horizon Vanguard Value Index is expected to generate 1.05 times more return on investment than Clarkston Fund. However, Vanguard Value is 1.05 times more volatile than Clarkston Fund Institutional. It trades about 0.16 of its potential returns per unit of risk. Clarkston Fund Institutional is currently generating about 0.16 per unit of risk. If you would invest  6,637  in Vanguard Value Index on August 31, 2024 and sell it today you would earn a total of  453.00  from holding Vanguard Value Index or generate 6.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Vanguard Value Index  vs.  Clarkston Fund Institutional

Vanguard Value Index

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Value may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Clarkston Fund Insti

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkston Fund Institutional are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Clarkston Fund 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 Value and Clarkston Fund

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

The idea behind Vanguard Value Index and Clarkston Fund Institutional 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .