Correlation Between Vanguard Extended and Clearbridge Mid
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Clearbridge 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 Vanguard Extended and Clearbridge Mid 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 Clearbridge Mid Cap, you can compare the effects of market volatilities on Vanguard Extended and Clearbridge 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 Vanguard Extended with a short position of Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Clearbridge Mid.
Diversification Opportunities for Vanguard Extended and Clearbridge Mid
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Clearbridge is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Clearbridge Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Mid Cap 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 Clearbridge Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Mid Cap has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Clearbridge Mid go up and down completely randomly.
Pair Corralation between Vanguard Extended and Clearbridge Mid
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.18 times more return on investment than Clearbridge Mid. However, Vanguard Extended is 1.18 times more volatile than Clearbridge Mid Cap. It trades about 0.14 of its potential returns per unit of risk. Clearbridge Mid Cap is currently generating about 0.11 per unit of risk. If you would invest 12,719 in Vanguard Extended Market on September 1, 2024 and sell it today you would earn a total of 2,786 from holding Vanguard Extended Market or generate 21.9% 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. Clearbridge Mid Cap
Performance |
| Timeline |
| Vanguard Extended Market |
| Clearbridge Mid Cap |
Vanguard Extended and Clearbridge Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Clearbridge Mid
The main advantage of trading using opposite Vanguard Extended and Clearbridge Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Clearbridge 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 Clearbridge Mid will offset losses from the drop in Clearbridge Mid's long position.| Vanguard Extended vs. Vanguard Small Cap Index | Vanguard Extended vs. Vanguard Institutional Index | Vanguard Extended vs. Vanguard Total Bond | Vanguard Extended vs. Vanguard Total International |
| Clearbridge Mid vs. Shelton Emerging Markets | Clearbridge Mid vs. Doubleline Emerging Markets | Clearbridge Mid vs. Pnc Emerging Markets | Clearbridge Mid vs. Black Oak Emerging |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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