Correlation Between Vanguard Mid and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and Cambiar Smid 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 Mid and Cambiar Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Mid Cap Index and Cambiar Smid Fund, you can compare the effects of market volatilities on Vanguard Mid and Cambiar Smid 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 Mid with a short position of Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Cambiar Smid.
Diversification Opportunities for Vanguard Mid and Cambiar Smid
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Cambiar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid and Vanguard Mid 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 Mid Cap Index are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Cambiar Smid go up and down completely randomly.
Pair Corralation between Vanguard Mid and Cambiar Smid
Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 0.8 times more return on investment than Cambiar Smid. However, Vanguard Mid Cap Index is 1.25 times less risky than Cambiar Smid. It trades about 0.34 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.17 per unit of risk. If you would invest 32,946 in Vanguard Mid Cap Index on August 30, 2024 and sell it today you would earn a total of 2,212 from holding Vanguard Mid Cap Index or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Cambiar Smid Fund
Performance |
| Timeline |
| Vanguard Mid Cap |
| Cambiar Smid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Vanguard Mid and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Cambiar Smid
The main advantage of trading using opposite Vanguard Mid and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid's long position.| Vanguard Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard 500 Index | Vanguard Mid vs. Vanguard Growth Index | Vanguard Mid vs. Vanguard Total International |
| Cambiar Smid vs. Nebraska Municipal Fund | Cambiar Smid vs. T Rowe Price | Cambiar Smid vs. Federated Short Intermediate Duration | Cambiar Smid vs. Performance Trust Strategic |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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