Correlation Between Ab Value and Vanguard Mid-cap
Can any of the company-specific risk be diversified away by investing in both Ab Value and Vanguard Mid-cap 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 Ab Value and Vanguard Mid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Value Fund and Vanguard Mid Cap Index, you can compare the effects of market volatilities on Ab Value and Vanguard Mid-cap 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 Ab Value with a short position of Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Vanguard Mid-cap.
Diversification Opportunities for Ab Value and Vanguard Mid-cap
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABVCX and VANGUARD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap and Ab 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 Ab Value Fund are associated (or correlated) with Vanguard Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Ab Value i.e., Ab Value and Vanguard Mid-cap go up and down completely randomly.
Pair Corralation between Ab Value and Vanguard Mid-cap
Assuming the 90 days horizon Ab Value is expected to generate 2.46 times less return on investment than Vanguard Mid-cap. In addition to that, Ab Value is 1.11 times more volatile than Vanguard Mid Cap Index. It trades about 0.02 of its total potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.07 per unit of volatility. If you would invest 28,206 in Vanguard Mid Cap Index on December 13, 2024 and sell it today you would earn a total of 6,207 from holding Vanguard Mid Cap Index or generate 22.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Value Fund vs. Vanguard Mid Cap Index
Performance |
| Timeline |
| Ab Value Fund |
| Vanguard Mid Cap |
Ab Value and Vanguard Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Value and Vanguard Mid-cap
The main advantage of trading using opposite Ab Value and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, Vanguard Mid-cap 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 Vanguard Mid-cap will offset losses from the drop in Vanguard Mid-cap's long position.| Ab Value vs. Vanguard Health Care | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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