Correlation Between Vanguard Mid-cap and Sprott Gold
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Sprott Gold 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 Sprott Gold 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 Sprott Gold Equity, you can compare the effects of market volatilities on Vanguard Mid-cap and Sprott Gold 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 Sprott Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Sprott Gold.
Diversification Opportunities for Vanguard Mid-cap and Sprott Gold
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between VANGUARD and Sprott is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Sprott Gold Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Equity 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 Sprott Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Gold Equity has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Sprott Gold go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Sprott Gold
Assuming the 90 days horizon Vanguard Mid-cap is expected to generate 1.0 times less return on investment than Sprott Gold. But when comparing it to its historical volatility, Vanguard Mid Cap Index is 1.84 times less risky than Sprott Gold. It trades about 0.08 of its potential returns per unit of risk. Sprott Gold Equity is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,250 in Sprott Gold Equity on September 3, 2024 and sell it today you would earn a total of 1,313 from holding Sprott Gold Equity or generate 30.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Sprott Gold Equity
Performance |
| Timeline |
| Vanguard Mid Cap |
| Sprott Gold Equity |
Vanguard Mid-cap and Sprott Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Sprott Gold
The main advantage of trading using opposite Vanguard Mid-cap and Sprott Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Sprott Gold 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 Sprott Gold will offset losses from the drop in Sprott Gold's long position.| Vanguard Mid-cap vs. Sprott Gold Equity | Vanguard Mid-cap vs. Franklin Gold Precious | Vanguard Mid-cap vs. Gold And Precious | Vanguard Mid-cap vs. Europac Gold Fund |
| Sprott Gold vs. Sprott Junior Gold | Sprott Gold vs. Sprott Gold Miners | Sprott Gold vs. Europac Gold Fund | Sprott Gold vs. US Global GO |
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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