Correlation Between Vanguard and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard and VanEck ETF 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 and VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP Mid Cap and VanEck ETF Trust, you can compare the effects of market volatilities on Vanguard and VanEck ETF 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 with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and VanEck ETF.
Diversification Opportunities for Vanguard and VanEck ETF
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and VanEck is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Mid Cap and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust and Vanguard 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 SP Mid Cap are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Vanguard i.e., Vanguard and VanEck ETF go up and down completely randomly.
Pair Corralation between Vanguard and VanEck ETF
Given the investment horizon of 90 days Vanguard SP Mid Cap is expected to generate 1.15 times more return on investment than VanEck ETF. However, Vanguard is 1.15 times more volatile than VanEck ETF Trust. It trades about 0.19 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.19 per unit of risk. If you would invest 10,444 in Vanguard SP Mid Cap on August 26, 2024 and sell it today you would earn a total of 873.00 from holding Vanguard SP Mid Cap or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP Mid Cap vs. VanEck ETF Trust
Performance |
| Timeline |
| Vanguard SP Mid |
| VanEck ETF Trust |
Vanguard and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and VanEck ETF
The main advantage of trading using opposite Vanguard and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, VanEck ETF 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 VanEck ETF will offset losses from the drop in VanEck ETF's long position.| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Small Cap |
| VanEck ETF vs. Vanguard Mid Cap Index | VanEck ETF vs. Vanguard Extended Market | VanEck ETF vs. iShares Core SP | VanEck ETF vs. SPDR SP MIDCAP |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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