Correlation Between Vanguard Institutional and Causeway International

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

By analyzing existing cross correlation between Vanguard Institutional Index and Causeway International Value, you can compare the effects of market volatilities on Vanguard Institutional and Causeway International 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 Institutional with a short position of Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Institutional and Causeway International.

Diversification Opportunities for Vanguard Institutional and Causeway International

0.94

Correlation Coefficient

Vanguard Institutional  Causeway International

Almost no diversification

The 3 months correlation between Vanguard and Causeway is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Institutional Index and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and Vanguard Institutional 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 Institutional Index are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Vanguard Institutional i.e., Vanguard Institutional and Causeway International go up and down completely randomly.

Pair Corralation between Vanguard Institutional and Causeway International

Assuming the 90 days horizon Vanguard Institutional Index is expected to generate 1.18 times more return on investment than Causeway International. However, Vanguard Institutional is 1.18 times more volatile than Causeway International Value. It trades about 0.06 of its potential returns per unit of risk. Causeway International Value is currently generating about 0.04 per unit of risk. If you would invest  46,103  in Vanguard Institutional Index on March 19, 2025 and sell it today you would earn a total of  3,068  from holding Vanguard Institutional Index or generate 6.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Vanguard Institutional Index  vs.  Causeway International Value

Vanguard Institutional

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Institutional Index are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Institutional may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Causeway International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Causeway International Value are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Causeway International 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 Institutional and Causeway International

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

The idea behind Vanguard Institutional Index and Causeway International Value 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.