Correlation Between Vanguard Extended and Sp Midcap
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Sp Midcap 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 Extended and Sp Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Sp Midcap Index, you can compare the effects of market volatilities on Vanguard Extended and Sp Midcap 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 Extended with a short position of Sp Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Sp Midcap.
Diversification Opportunities for Vanguard Extended and Sp Midcap
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and MIDKX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Sp Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap Index and Vanguard Extended 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 Extended Market are associated (or correlated) with Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap Index has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Sp Midcap go up and down completely randomly.
Pair Corralation between Vanguard Extended and Sp Midcap
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.12 times more return on investment than Sp Midcap. However, Vanguard Extended is 1.12 times more volatile than Sp Midcap Index. It trades about 0.22 of its potential returns per unit of risk. Sp Midcap Index is currently generating about 0.17 per unit of risk. If you would invest 33,089 in Vanguard Extended Market on August 28, 2024 and sell it today you would earn a total of 5,465 from holding Vanguard Extended Market or generate 16.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Sp Midcap Index
Performance |
| Timeline |
| Vanguard Extended Market |
| Sp Midcap Index |
Vanguard Extended and Sp Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Sp Midcap
The main advantage of trading using opposite Vanguard Extended and Sp Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Sp Midcap 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 Sp Midcap will offset losses from the drop in Sp Midcap's long position.| Vanguard Extended vs. William Blair Large | Vanguard Extended vs. Aqr Large Cap | Vanguard Extended vs. Goldman Sachs Large | Vanguard Extended vs. Fidelity Stock Selector |
| Sp Midcap vs. Allianzgi Health Sciences | Sp Midcap vs. Prudential Health Sciences | Sp Midcap vs. Baron Health Care | Sp Midcap vs. Alger Health Sciences |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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