Correlation Between Vanguard Mid and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and VanEck ETF 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 VanEck ETF 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 VanEck ETF Trust, you can compare the effects of market volatilities on Vanguard Mid and VanEck ETF 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 VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and VanEck ETF.
Diversification Opportunities for Vanguard Mid and VanEck ETF
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and VanEck is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust 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 VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and VanEck ETF go up and down completely randomly.
Pair Corralation between Vanguard Mid and VanEck ETF
Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to generate 0.84 times more return on investment than VanEck ETF. However, Vanguard Mid Cap Index is 1.19 times less risky than VanEck ETF. It trades about 0.07 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.05 per unit of risk. If you would invest 20,867 in Vanguard Mid Cap Index on November 9, 2024 and sell it today you would earn a total of 6,846 from holding Vanguard Mid Cap Index or generate 32.81% 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. VanEck ETF Trust
Performance |
| Timeline |
| Vanguard Mid Cap |
| VanEck ETF Trust |
Vanguard Mid and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and VanEck ETF
The main advantage of trading using opposite Vanguard Mid and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, VanEck ETF 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 VanEck ETF will offset losses from the drop in VanEck ETF'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 |
| VanEck ETF vs. VanEck Morningstar International | VanEck ETF vs. VanEck Vectors ETF | VanEck ETF vs. VanEck Morningstar Wide | VanEck ETF vs. VanEck Inflation Allocation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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