Correlation Between Vanguard Mid-cap and Paradigm Select
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Paradigm Select 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 Paradigm Select 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 Paradigm Select Fund, you can compare the effects of market volatilities on Vanguard Mid-cap and Paradigm Select 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 Paradigm Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Paradigm Select.
Diversification Opportunities for Vanguard Mid-cap and Paradigm Select
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Paradigm is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Paradigm Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Select 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 Paradigm Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Select has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Paradigm Select go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Paradigm Select
Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 0.7 times more return on investment than Paradigm Select. However, Vanguard Mid Cap Index is 1.43 times less risky than Paradigm Select. It trades about 0.22 of its potential returns per unit of risk. Paradigm Select Fund is currently generating about 0.09 per unit of risk. If you would invest 7,166 in Vanguard Mid Cap Index on August 25, 2024 and sell it today you would earn a total of 530.00 from holding Vanguard Mid Cap Index or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Paradigm Select Fund
Performance |
| Timeline |
| Vanguard Mid Cap |
| Paradigm Select |
Vanguard Mid-cap and Paradigm Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Paradigm Select
The main advantage of trading using opposite Vanguard Mid-cap and Paradigm Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Paradigm Select 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 Paradigm Select will offset losses from the drop in Paradigm Select's long position.| Vanguard Mid-cap vs. Vanguard Small Cap Index | Vanguard Mid-cap vs. Vanguard 500 Index | Vanguard Mid-cap vs. Vanguard Growth Index | Vanguard Mid-cap vs. Vanguard Total International |
| Paradigm Select vs. Paradigm Micro Cap Fund | Paradigm Select vs. Paradigm Value Fund | Paradigm Select vs. Needham Small Cap | Paradigm Select vs. Touchstone Mid 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |