Correlation Between Vanguard Mid-cap and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Cambiar Smid 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 Cambiar Smid 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 Cambiar Smid Fund, you can compare the effects of market volatilities on Vanguard Mid-cap and Cambiar Smid 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 Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Cambiar Smid.
Diversification Opportunities for Vanguard Mid-cap and Cambiar Smid
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Cambiar is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid 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 Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Cambiar Smid go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Cambiar Smid
Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 1.07 times more return on investment than Cambiar Smid. However, Vanguard Mid-cap is 1.07 times more volatile than Cambiar Smid Fund. It trades about 0.08 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.05 per unit of risk. If you would invest 27,293 in Vanguard Mid Cap Index on August 30, 2024 and sell it today you would earn a total of 11,045 from holding Vanguard Mid Cap Index or generate 40.47% 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. Cambiar Smid Fund
Performance |
| Timeline |
| Vanguard Mid Cap |
| Cambiar Smid |
Vanguard Mid-cap and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Cambiar Smid
The main advantage of trading using opposite Vanguard Mid-cap and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid's long position.| Vanguard Mid-cap vs. Vanguard Mid Cap Index | Vanguard Mid-cap vs. Vanguard Mid Cap Index | Vanguard Mid-cap vs. Vanguard Mid Cap Index | Vanguard Mid-cap vs. Vanguard Extended Market |
| Cambiar Smid vs. T Rowe Price | Cambiar Smid vs. Astor Longshort Fund | Cambiar Smid vs. Ambrus Core Bond | Cambiar Smid vs. Bbh Intermediate Municipal |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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