Correlation Between Vanguard Extended and Hartford Schroders

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

Diversification Opportunities for Vanguard Extended and Hartford Schroders

0.95

Correlation Coefficient

Vanguard Extended  Hartford Schroders

Almost no diversification

The 3 months correlation between Vanguard and Hartford is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Hartford Schroders Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Schroders 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 Hartford Schroders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Schroders has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Hartford Schroders go up and down completely randomly.

Pair Corralation between Vanguard Extended and Hartford Schroders

Assuming the 90 days horizon Vanguard Extended Market is expected to under-perform the Hartford Schroders. In addition to that, Vanguard Extended is 1.2 times more volatile than Hartford Schroders Smallmid. It trades about -0.1 of its total potential returns per unit of risk. Hartford Schroders Smallmid is currently generating about 0.01 per unit of volatility. If you would invest  1,907  in Hartford Schroders Smallmid on March 28, 2024 and sell it today you would earn a total of  3.00  from holding Hartford Schroders Smallmid or generate 0.16% return on investment over 90 days.

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

Vanguard Extended Market  vs.  Hartford Schroders Smallmid

Vanguard Extended Market

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Extended Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Vanguard Extended is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Schroders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Schroders Smallmid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hartford Schroders 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 Hartford Schroders

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

The idea behind Vanguard Extended Market and Hartford Schroders Smallmid 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.