Correlation Between Vanguard Mid-cap and Vanguard Wellington
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Vanguard Wellington 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 Wellington 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 Wellington Fund, you can compare the effects of market volatilities on Vanguard Mid-cap and Vanguard Wellington 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 Wellington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Vanguard Wellington.
Diversification Opportunities for Vanguard Mid-cap and Vanguard Wellington
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and Vanguard Wellington Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Wellington 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 Wellington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Wellington has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Vanguard Wellington go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Vanguard Wellington
Assuming the 90 days horizon Vanguard Mid Cap Value is expected to generate 1.37 times more return on investment than Vanguard Wellington. However, Vanguard Mid-cap is 1.37 times more volatile than Vanguard Wellington Fund. It trades about 0.07 of its potential returns per unit of risk. Vanguard Wellington Fund is currently generating about 0.07 per unit of risk. If you would invest 6,907 in Vanguard Mid Cap Value on August 24, 2024 and sell it today you would earn a total of 2,057 from holding Vanguard Mid Cap Value or generate 29.78% 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 Value vs. Vanguard Wellington Fund
Performance |
| Timeline |
| Vanguard Mid Cap |
| Vanguard Wellington |
Vanguard Mid-cap and Vanguard Wellington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Vanguard Wellington
The main advantage of trading using opposite Vanguard Mid-cap and Vanguard Wellington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Vanguard Wellington 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 Wellington will offset losses from the drop in Vanguard Wellington's long position.| Vanguard Mid-cap vs. Fidelity Low Priced Stock | Vanguard Mid-cap vs. Fidelity Low Priced Stock | Vanguard Mid-cap vs. John Hancock Disciplined | Vanguard Mid-cap vs. John Hancock Disciplined |
| Vanguard Wellington vs. American Funds American | Vanguard Wellington vs. American Funds American | Vanguard Wellington vs. American Balanced | Vanguard Wellington vs. American Balanced 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |