Correlation Between Vanguard Information and Hodges Small

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

By analyzing existing cross correlation between Vanguard Information Technology and Hodges Small Intrinsic, you can compare the effects of market volatilities on Vanguard Information and Hodges Small 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 Information with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Information and Hodges Small.

Diversification Opportunities for Vanguard Information and Hodges Small

0.71

Correlation Coefficient

Vanguard Information  Hodges Small

Poor diversification

The 3 months correlation between Vanguard and Hodges is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and Hodges Small Intrinsic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Intrinsic and Vanguard Information 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 Information Technology are associated (or correlated) with Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Intrinsic has no effect on the direction of Vanguard Information i.e., Vanguard Information and Hodges Small go up and down completely randomly.

Pair Corralation between Vanguard Information and Hodges Small

Assuming the 90 days horizon Vanguard Information Technology is expected to generate 0.8 times more return on investment than Hodges Small. However, Vanguard Information Technology is 1.25 times less risky than Hodges Small. It trades about 0.27 of its potential returns per unit of risk. Hodges Small Intrinsic is currently generating about 0.08 per unit of risk. If you would invest  28,821  in Vanguard Information Technology on May 5, 2025 and sell it today you would earn a total of  5,713  from holding Vanguard Information Technology or generate 19.82% return on investment over 90 days.

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

Vanguard Information Technolog  vs.  Hodges Small Intrinsic

Vanguard Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information showed solid returns over the last few months and may actually be approaching a breakup point.

Hodges Small Intrinsic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Small Intrinsic are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hodges Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vanguard Information and Hodges Small

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

The idea behind Vanguard Information Technology and Hodges Small Intrinsic 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.