Correlation Between Mid Cap and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Vanguard Emerging 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 Mid Cap and Vanguard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Vanguard Emerging Markets, you can compare the effects of market volatilities on Mid Cap and Vanguard Emerging 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 Mid Cap with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Vanguard Emerging.
Diversification Opportunities for Mid Cap and Vanguard Emerging
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Mid Cap i.e., Mid Cap and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Mid Cap and Vanguard Emerging
Assuming the 90 days horizon Mid Cap Growth is expected to generate 1.7 times more return on investment than Vanguard Emerging. However, Mid Cap is 1.7 times more volatile than Vanguard Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.06 per unit of risk. If you would invest 3,399 in Mid Cap Growth on March 28, 2025 and sell it today you would earn a total of 688.00 from holding Mid Cap Growth or generate 20.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Mid Cap Growth vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Mid Cap Growth |
| Vanguard Emerging Markets |
Mid Cap and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Vanguard Emerging
The main advantage of trading using opposite Mid Cap and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Vanguard Emerging 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 Emerging will offset losses from the drop in Vanguard Emerging's long position.| Mid Cap vs. Thrivent High Yield | Mid Cap vs. Via Renewables | Mid Cap vs. Bondbloxx ETF Trust | Mid Cap vs. Jpmorgan Smartretirement Blend |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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