Correlation Between Vanguard Extended and Vanguard
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Vanguard 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 Extended and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Vanguard SP Mid Cap, you can compare the effects of market volatilities on Vanguard Extended and Vanguard 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 Extended with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Vanguard.
Diversification Opportunities for Vanguard Extended and Vanguard
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Vanguard SP Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP Mid and Vanguard Extended 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 Extended Market are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP Mid has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Vanguard go up and down completely randomly.
Pair Corralation between Vanguard Extended and Vanguard
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.1 times more return on investment than Vanguard. However, Vanguard Extended is 1.1 times more volatile than Vanguard SP Mid Cap. It trades about 0.08 of its potential returns per unit of risk. Vanguard SP Mid Cap is currently generating about 0.07 per unit of risk. If you would invest 13,312 in Vanguard Extended Market on August 27, 2024 and sell it today you would earn a total of 7,030 from holding Vanguard Extended Market or generate 52.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Vanguard SP Mid Cap
Performance |
| Timeline |
| Vanguard Extended Market |
| Vanguard SP Mid |
Vanguard Extended and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Vanguard
The main advantage of trading using opposite Vanguard Extended and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Vanguard 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 will offset losses from the drop in Vanguard's long position.| Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. iShares Core SP | Vanguard Extended vs. SPDR SP MIDCAP | Vanguard Extended vs. First Trust Dorsey |
| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Small 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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