Correlation Between Vanguard Small-cap and Mid-cap Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Mid-cap Growth 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 Small-cap and Mid-cap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Mid Cap Growth Profund, you can compare the effects of market volatilities on Vanguard Small-cap and Mid-cap Growth 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 Small-cap with a short position of Mid-cap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Mid-cap Growth.
Diversification Opportunities for Vanguard Small-cap and Mid-cap Growth
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and MID-CAP is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Mid Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Vanguard Small-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 Small Cap Value are associated (or correlated) with Mid-cap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Mid-cap Growth go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Mid-cap Growth
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 1.07 times more return on investment than Mid-cap Growth. However, Vanguard Small-cap is 1.07 times more volatile than Mid Cap Growth Profund. It trades about 0.25 of its potential returns per unit of risk. Mid Cap Growth Profund is currently generating about 0.27 per unit of risk. If you would invest 4,825 in Vanguard Small Cap Value on August 29, 2024 and sell it today you would earn a total of 354.00 from holding Vanguard Small Cap Value or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Mid Cap Growth Profund
Performance |
| Timeline |
| Vanguard Small Cap |
| Mid Cap Growth |
Vanguard Small-cap and Mid-cap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Mid-cap Growth
The main advantage of trading using opposite Vanguard Small-cap and Mid-cap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Mid-cap Growth 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 Mid-cap Growth will offset losses from the drop in Mid-cap Growth's long position.| Vanguard Small-cap vs. Qs Growth Fund | Vanguard Small-cap vs. Shelton Funds | Vanguard Small-cap vs. T Rowe Price | Vanguard Small-cap vs. T Rowe Price |
| Mid-cap Growth vs. Small Cap Growth Profund | Mid-cap Growth vs. Mid Cap Value Profund | Mid-cap Growth vs. Small Cap Value Profund | Mid-cap Growth vs. Mid Cap Profund 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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