Correlation Between Vanguard Mid and Clearbridge Mid
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid 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 Mid 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 Mid Cap Index and Clearbridge Mid Cap, you can compare the effects of market volatilities on Vanguard Mid 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 Mid with a short position of Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Clearbridge Mid.
Diversification Opportunities for Vanguard Mid and Clearbridge Mid
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Clearbridge is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index 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 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 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 Mid i.e., Vanguard Mid and Clearbridge Mid go up and down completely randomly.
Pair Corralation between Vanguard Mid and Clearbridge Mid
Assuming the 90 days horizon Vanguard Mid is expected to generate 1.1 times less return on investment than Clearbridge Mid. But when comparing it to its historical volatility, Vanguard Mid Cap Index is 1.26 times less risky than Clearbridge Mid. It trades about 0.24 of its potential returns per unit of risk. Clearbridge Mid Cap is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,412 in Clearbridge Mid Cap on August 30, 2024 and sell it today you would earn a total of 200.00 from holding Clearbridge Mid Cap or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Clearbridge Mid Cap
Performance |
| Timeline |
| Vanguard Mid Cap |
| Clearbridge Mid Cap |
Vanguard Mid and Clearbridge Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Clearbridge Mid
The main advantage of trading using opposite Vanguard Mid and Clearbridge Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid 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 Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard 500 Index | Vanguard Mid vs. Vanguard Growth Index | Vanguard Mid vs. Vanguard Total International |
| Clearbridge Mid vs. Vanguard Mid Cap Index | Clearbridge Mid vs. Vanguard Mid Cap Index | Clearbridge Mid vs. Vanguard Mid Cap Index | Clearbridge Mid vs. Vanguard Extended Market |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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