Correlation Between Blackrock Midcap and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Blackrock Midcap and Vanguard Extended 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 Blackrock Midcap and Vanguard Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Midcap Index and Vanguard Extended Market, you can compare the effects of market volatilities on Blackrock Midcap and Vanguard Extended 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 Blackrock Midcap with a short position of Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Midcap and Vanguard Extended.
Diversification Opportunities for Blackrock Midcap and Vanguard Extended
1.0 | Correlation Coefficient |
No risk reduction
The 1 month correlation between Blackrock and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Midcap Index and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market and Blackrock Midcap 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 Blackrock Midcap Index are associated (or correlated) with Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Blackrock Midcap i.e., Blackrock Midcap and Vanguard Extended go up and down completely randomly.
Pair Corralation between Blackrock Midcap and Vanguard Extended
Assuming the 90 days horizon Blackrock Midcap Index is expected to generate 0.82 times more return on investment than Vanguard Extended. However, Blackrock Midcap Index is 1.23 times less risky than Vanguard Extended. It trades about -0.02 of its potential returns per unit of risk. Vanguard Extended Market is currently generating about -0.06 per unit of risk. If you would invest 1,397 in Blackrock Midcap Index on January 24, 2024 and sell it today you would lose (9.00) from holding Blackrock Midcap Index or give up 0.64% of portfolio value over 90 days.
| Time Period | 1 Month [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Midcap Index vs. Vanguard Extended Market
Performance |
| Timeline |
| Blackrock Midcap Index |
| Vanguard Extended Market |
Blackrock Midcap and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Midcap and Vanguard Extended
The main advantage of trading using opposite Blackrock Midcap and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Midcap position performs unexpectedly, Vanguard Extended 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 Extended will offset losses from the drop in Vanguard Extended's long position.| Blackrock Midcap vs. Blackrock Sm Cap | Blackrock Midcap vs. Blackrock Sp 500 | Blackrock Midcap vs. Blackrock Total Stock | Blackrock Midcap vs. Blackrock Intern Index |
| Vanguard Extended vs. Vanguard Materials Index | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Global Minimum |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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