Correlation Between Vanguard Mid and Global X
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and Global X 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 and Global X 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 Global X MSCI, you can compare the effects of market volatilities on Vanguard Mid and Global X 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 with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Global X.
Diversification Opportunities for Vanguard Mid and Global X
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Vanguard Mid 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Global X go up and down completely randomly.
Pair Corralation between Vanguard Mid and Global X
Allowing for the 90-day total investment horizon Vanguard Mid is expected to generate 2.21 times less return on investment than Global X. But when comparing it to its historical volatility, Vanguard Mid Cap Index is 2.19 times less risky than Global X. It trades about 0.11 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,230 in Global X MSCI on September 1, 2024 and sell it today you would earn a total of 4,122 from holding Global X MSCI or generate 97.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Global X MSCI
Performance |
| Timeline |
| Vanguard Mid Cap |
| Global X MSCI |
Vanguard Mid and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Global X
The main advantage of trading using opposite Vanguard Mid and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Vanguard Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
| Global X vs. Global X MSCI | Global X vs. iShares MSCI Peru | Global X vs. iShares MSCI Chile | Global X vs. Global X MSCI |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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