Correlation Between Vanguard Mid-cap and American Funds
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and American Funds 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 American Funds 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 American Funds Fundamental, you can compare the effects of market volatilities on Vanguard Mid-cap and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and American Funds.
Diversification Opportunities for Vanguard Mid-cap and American Funds
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and American Funds Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Funda has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and American Funds go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and American Funds
Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 1.05 times more return on investment than American Funds. However, Vanguard Mid-cap is 1.05 times more volatile than American Funds Fundamental. It trades about 0.31 of its potential returns per unit of risk. American Funds Fundamental is currently generating about 0.12 per unit of risk. If you would invest 7,297 in Vanguard Mid Cap Index on August 27, 2024 and sell it today you would earn a total of 415.00 from holding Vanguard Mid Cap Index or generate 5.69% 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. American Funds Fundamental
Performance |
| Timeline |
| Vanguard Mid Cap |
| American Funds Funda |
Vanguard Mid-cap and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and American Funds
The main advantage of trading using opposite Vanguard Mid-cap and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Vanguard Mid-cap vs. Vanguard Small Cap Index | Vanguard Mid-cap vs. Vanguard Institutional Index | Vanguard Mid-cap vs. Vanguard Total Bond | Vanguard Mid-cap vs. Vanguard Total International |
| American Funds vs. Income Fund Of | American Funds vs. American Funds 2015 | American Funds vs. New World Fund | American Funds vs. American Mutual 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |