Correlation Between DBX ETF and Vanguard Mid
Can any of the company-specific risk be diversified away by investing in both DBX ETF and Vanguard Mid 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 DBX ETF and Vanguard Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBX ETF Trust and Vanguard Mid Cap Index, you can compare the effects of market volatilities on DBX ETF and Vanguard Mid 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 DBX ETF with a short position of Vanguard Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBX ETF and Vanguard Mid.
Diversification Opportunities for DBX ETF and Vanguard Mid
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DBX and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust 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 DBX ETF 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 DBX ETF Trust are associated (or correlated) with Vanguard Mid. 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 DBX ETF i.e., DBX ETF and Vanguard Mid go up and down completely randomly.
Pair Corralation between DBX ETF and Vanguard Mid
Given the investment horizon of 90 days DBX ETF Trust is expected to under-perform the Vanguard Mid. In addition to that, DBX ETF is 1.08 times more volatile than Vanguard Mid Cap Index. It trades about -0.09 of its total potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about -0.05 per unit of volatility. If you would invest 28,280 in Vanguard Mid Cap Index on October 26, 2024 and sell it today you would lose (516.00) from holding Vanguard Mid Cap Index or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBX ETF Trust vs. Vanguard Mid Cap Index
Performance |
| Timeline |
| DBX ETF Trust |
| Vanguard Mid Cap |
DBX ETF and Vanguard Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBX ETF and Vanguard Mid
The main advantage of trading using opposite DBX ETF and Vanguard Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX ETF position performs unexpectedly, Vanguard Mid 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 will offset losses from the drop in Vanguard Mid's long position.The idea behind DBX ETF Trust and Vanguard Mid Cap Index 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.| Vanguard Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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