Correlation Between Vanguard Value and Huber Capital

Can any of the company-specific risk be diversified away by investing in both Vanguard Value and Huber Capital 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 Huber Capital 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 Huber Capital Equity, you can compare the effects of market volatilities on Vanguard Value and Huber Capital 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 Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Huber Capital.

Diversification Opportunities for Vanguard Value and Huber Capital

0.9

Correlation Coefficient

Vanguard Value  Huber Capital

Almost no diversification

The 3 months correlation between Vanguard and HUBER is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Huber Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Equity 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 Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Equity has no effect on the direction of Vanguard Value i.e., Vanguard Value and Huber Capital go up and down completely randomly.

Pair Corralation between Vanguard Value and Huber Capital

Assuming the 90 days horizon Vanguard Value Index is expected to generate 0.75 times more return on investment than Huber Capital. However, Vanguard Value Index is 1.33 times less risky than Huber Capital. It trades about 0.16 of its potential returns per unit of risk. Huber Capital Equity is currently generating about 0.12 per unit of risk. If you would invest  6,634  in Vanguard Value Index on August 31, 2024 and sell it today you would earn a total of  438.00  from holding Vanguard Value Index or generate 6.6% return on investment over 90 days.

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

Vanguard Value Index  vs.  Huber Capital Equity

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.

Huber Capital Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Huber Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vanguard Value and Huber Capital

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

The idea behind Vanguard Value Index and Huber Capital Equity 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.