Correlation Between Vanguard Mid-cap and Bridge Builder
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Bridge Builder 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-cap and Bridge Builder 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 Bridge Builder Trust, you can compare the effects of market volatilities on Vanguard Mid-cap and Bridge Builder 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-cap with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Bridge Builder.
Diversification Opportunities for Vanguard Mid-cap and Bridge Builder
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Bridge is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Bridge Builder Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Trust and Vanguard Mid-cap 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 Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Trust has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Bridge Builder go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Bridge Builder
Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 0.87 times more return on investment than Bridge Builder. However, Vanguard Mid Cap Index is 1.16 times less risky than Bridge Builder. It trades about 0.07 of its potential returns per unit of risk. Bridge Builder Trust is currently generating about 0.04 per unit of risk. If you would invest 5,692 in Vanguard Mid Cap Index on November 27, 2024 and sell it today you would earn a total of 1,676 from holding Vanguard Mid Cap Index or generate 29.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Bridge Builder Trust
Performance |
| Timeline |
| Vanguard Mid Cap |
| Bridge Builder Trust |
Vanguard Mid-cap and Bridge Builder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Bridge Builder
The main advantage of trading using opposite Vanguard Mid-cap and Bridge Builder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Bridge Builder 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 Bridge Builder will offset losses from the drop in Bridge Builder's long position.| Vanguard Mid-cap vs. Artisan High Income | Vanguard Mid-cap vs. Doubleline Emerging Markets | Vanguard Mid-cap vs. Multisector Bond Sma | Vanguard Mid-cap vs. Touchstone Ultra Short |
| Bridge Builder vs. Lord Abbett Affiliated | Bridge Builder vs. Profunds Large Cap Growth | Bridge Builder vs. Old Westbury Large | Bridge Builder vs. Calvert Large Cap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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