Correlation Between Vanguard Tax-managed and Clipper Fund

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

By analyzing existing cross correlation between Vanguard Tax Managed Small Cap and Clipper Fund Inc, you can compare the effects of market volatilities on Vanguard Tax-managed and Clipper 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 Tax-managed with a short position of Clipper Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Tax-managed and Clipper Fund.

Diversification Opportunities for Vanguard Tax-managed and Clipper Fund

0.97

Correlation Coefficient

Vanguard Tax-managed  Clipper Fund

Almost no diversification

The 3 months correlation between Vanguard and Clipper is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Tax Managed Small Cap and Clipper Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Fund and Vanguard Tax-managed 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 Tax Managed Small Cap are associated (or correlated) with Clipper Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Fund has no effect on the direction of Vanguard Tax-managed i.e., Vanguard Tax-managed and Clipper Fund go up and down completely randomly.

Pair Corralation between Vanguard Tax-managed and Clipper Fund

Assuming the 90 days horizon Vanguard Tax Managed Small Cap is expected to generate 1.29 times more return on investment than Clipper Fund. However, Vanguard Tax-managed is 1.29 times more volatile than Clipper Fund Inc. It trades about 0.18 of its potential returns per unit of risk. Clipper Fund Inc is currently generating about 0.23 per unit of risk. If you would invest  8,128  in Vanguard Tax Managed Small Cap on April 24, 2025 and sell it today you would earn a total of  1,085  from holding Vanguard Tax Managed Small Cap or generate 13.35% return on investment over 90 days.

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

Vanguard Tax Managed Small Cap  vs.  Clipper Fund Inc

Vanguard Tax Managed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Tax Managed Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Tax-managed showed solid returns over the last few months and may actually be approaching a breakup point.

Clipper Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clipper Fund Inc are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Clipper Fund may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Vanguard Tax-managed and Clipper Fund

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

The idea behind Vanguard Tax Managed Small Cap and Clipper Fund Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.