Correlation Between Vanguard Mid-cap and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Diamond Hill 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 Diamond Hill 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 Diamond Hill All, you can compare the effects of market volatilities on Vanguard Mid-cap and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Diamond Hill.
Diversification Opportunities for Vanguard Mid-cap and Diamond Hill
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Diamond is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and Diamond Hill All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill All 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill All has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Diamond Hill go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Diamond Hill
Assuming the 90 days horizon Vanguard Mid-cap is expected to generate 1.11 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, Vanguard Mid Cap Value is 1.36 times less risky than Diamond Hill. It trades about 0.11 of its potential returns per unit of risk. Diamond Hill All is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,953 in Diamond Hill All on September 1, 2024 and sell it today you would earn a total of 758.00 from holding Diamond Hill All or generate 38.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Value vs. Diamond Hill All
Performance |
| Timeline |
| Vanguard Mid Cap |
| Diamond Hill All |
Vanguard Mid-cap and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Diamond Hill
The main advantage of trading using opposite Vanguard Mid-cap and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Vanguard Mid-cap vs. Goldman Sachs Financial | Vanguard Mid-cap vs. Royce Global Financial | Vanguard Mid-cap vs. 1919 Financial Services | Vanguard Mid-cap vs. Angel Oak Financial |
| Diamond Hill vs. Diamond Hill All | Diamond Hill vs. Hotchkis Wiley Small | Diamond Hill vs. Diamond Hill Select | Diamond Hill vs. Jpmorgan Large 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |