Correlation Between Vanguard Mid-cap and Clearbridge Mid
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap 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-cap 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-cap 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-cap with a short position of Clearbridge Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Clearbridge Mid.
Diversification Opportunities for Vanguard Mid-cap 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-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 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-cap i.e., Vanguard Mid-cap and Clearbridge Mid go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Clearbridge Mid
Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 0.83 times more return on investment than Clearbridge Mid. However, Vanguard Mid Cap Index is 1.21 times less risky than Clearbridge Mid. It trades about 0.14 of its potential returns per unit of risk. Clearbridge Mid Cap is currently generating about 0.09 per unit of risk. If you would invest 5,925 in Vanguard Mid Cap Index on September 2, 2024 and sell it today you would earn a total of 1,841 from holding Vanguard Mid Cap Index or generate 31.07% 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-cap and Clearbridge Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Clearbridge Mid
The main advantage of trading using opposite Vanguard Mid-cap and Clearbridge Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap 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-cap vs. Blrc Sgy Mnp | Vanguard Mid-cap vs. The National Tax Free | Vanguard Mid-cap vs. Bbh Intermediate Municipal | Vanguard Mid-cap vs. Gamco Global Telecommunications |
| Clearbridge Mid vs. Clearbridge Aggressive Growth | Clearbridge Mid vs. Clearbridge Small Cap | Clearbridge Mid vs. Qs International Equity | Clearbridge Mid vs. Clearbridge Appreciation Fund |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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