Correlation Between Vanguard Value and Selected American
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and Selected American 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 Selected American 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 Selected American Shares, you can compare the effects of market volatilities on Vanguard Value and Selected American 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 Selected American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Selected American.
Diversification Opportunities for Vanguard Value and Selected American
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Selected is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares 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 Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of Vanguard Value i.e., Vanguard Value and Selected American go up and down completely randomly.
Pair Corralation between Vanguard Value and Selected American
Assuming the 90 days horizon Vanguard Value is expected to generate 1.22 times less return on investment than Selected American. But when comparing it to its historical volatility, Vanguard Value Index is 1.28 times less risky than Selected American. It trades about 0.1 of its potential returns per unit of risk. Selected American Shares is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,837 in Selected American Shares on June 8, 2025 and sell it today you would earn a total of 112.00 from holding Selected American Shares or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Vanguard Value Index vs. Selected American Shares
Performance |
| Timeline |
| Vanguard Value Index |
| Selected American Shares |
Vanguard Value and Selected American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Selected American
The main advantage of trading using opposite Vanguard Value and Selected American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, Selected American 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 Selected American will offset losses from the drop in Selected American's long position.| Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| Selected American vs. Marsico Focus Fund | Selected American vs. Artisan International Fund | Selected American vs. Third Avenue Value | Selected American vs. Oakmark Select Fund |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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