Correlation Between Vanguard Mid-cap and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Vanguard Emerging 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 Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Mid Cap Value and Vanguard Emerging Markets, you can compare the effects of market volatilities on Vanguard Mid-cap and Vanguard Emerging 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 Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Vanguard Emerging.
Diversification Opportunities for Vanguard Mid-cap and Vanguard Emerging
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Vanguard is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets 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 Value are associated (or correlated) with Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Vanguard Emerging
Assuming the 90 days horizon Vanguard Mid Cap Value is expected to generate 0.97 times more return on investment than Vanguard Emerging. However, Vanguard Mid Cap Value is 1.03 times less risky than Vanguard Emerging. It trades about 0.11 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 6,748 in Vanguard Mid Cap Value on September 2, 2024 and sell it today you would earn a total of 2,376 from holding Vanguard Mid Cap Value or generate 35.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Value vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Vanguard Mid Cap |
| Vanguard Emerging Markets |
Vanguard Mid-cap and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Vanguard Emerging
The main advantage of trading using opposite Vanguard Mid-cap and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Vanguard Emerging 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 Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| Vanguard Mid-cap vs. Vanguard Small Cap Value | Vanguard Mid-cap vs. Vanguard Mid Cap Growth | Vanguard Mid-cap vs. Vanguard Value Index | Vanguard Mid-cap vs. Vanguard Small Cap Growth |
| Vanguard Emerging vs. Blackrock Financial Institutions | Vanguard Emerging vs. Financials Ultrasector Profund | Vanguard Emerging vs. Royce Global Financial | Vanguard Emerging vs. Goldman Sachs Financial |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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