Correlation Between Growth Income and Vanguard Mid-cap

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Growth Income 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 Growth Income 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 Growth Income Fund and Vanguard Mid Cap Index, you can compare the effects of market volatilities on Growth Income 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 Growth Income with a short position of Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Income and Vanguard Mid-cap.

Diversification Opportunities for Growth Income and Vanguard Mid-cap

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Growth and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Growth Income 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 Growth Income 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 Growth Income 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 Growth Income i.e., Growth Income and Vanguard Mid-cap go up and down completely randomly.

Pair Corralation between Growth Income and Vanguard Mid-cap

Assuming the 90 days horizon Growth Income Fund is expected to generate 1.05 times more return on investment than Vanguard Mid-cap. However, Growth Income is 1.05 times more volatile than Vanguard Mid Cap Index. It trades about 0.07 of its potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.07 per unit of risk. If you would invest  2,110  in Growth Income Fund on August 24, 2024 and sell it today you would earn a total of  767.00  from holding Growth Income Fund or generate 36.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Growth Income Fund  vs.  Vanguard Mid Cap Index

 Performance 
       Timeline  
Growth Income 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Income Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Growth Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Vanguard Mid Cap 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Index are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Mid-cap may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Growth Income and Vanguard Mid-cap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Growth Income and Vanguard Mid-cap

The main advantage of trading using opposite Growth Income and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Income 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.
The idea behind Growth Income Fund 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.
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum