Correlation Between Vanguard Extended and Midcap Sp
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Midcap Sp 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 Midcap Sp 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 Midcap Sp 400, you can compare the effects of market volatilities on Vanguard Extended and Midcap Sp 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 Midcap Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Midcap Sp.
Diversification Opportunities for Vanguard Extended and Midcap Sp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Midcap is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Midcap Sp 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Sp 400 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 Midcap Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Sp 400 has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Midcap Sp go up and down completely randomly.
Pair Corralation between Vanguard Extended and Midcap Sp
Assuming the 90 days horizon Vanguard Extended Market is expected to under-perform the Midcap Sp. In addition to that, Vanguard Extended is 1.12 times more volatile than Midcap Sp 400. It trades about -0.15 of its total potential returns per unit of risk. Midcap Sp 400 is currently generating about -0.14 per unit of volatility. If you would invest 2,376 in Midcap Sp 400 on January 25, 2024 and sell it today you would lose (70.00) from holding Midcap Sp 400 or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Midcap Sp 400
Performance |
| Timeline |
| Vanguard Extended Market |
| Midcap Sp 400 |
Vanguard Extended and Midcap Sp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Midcap Sp
The main advantage of trading using opposite Vanguard Extended and Midcap Sp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Midcap Sp 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 Midcap Sp will offset losses from the drop in Midcap Sp's long position.| Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Extended Market |
| Midcap Sp vs. Government Street Equity | Midcap Sp vs. Federated Mdt Mid Cap | Midcap Sp vs. Janus Enterprise Fund | Midcap Sp vs. Victory Integrity Mid 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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