Correlation Between Vanguard 500 and Federated Max-cap
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Federated Max-cap 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 500 and Federated Max-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Federated Max Cap Index, you can compare the effects of market volatilities on Vanguard 500 and Federated Max-cap 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 500 with a short position of Federated Max-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Federated Max-cap.
Diversification Opportunities for Vanguard 500 and Federated Max-cap
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Federated is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Federated Max Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Max Cap and Vanguard 500 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 500 Index are associated (or correlated) with Federated Max-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Max Cap has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Federated Max-cap go up and down completely randomly.
Pair Corralation between Vanguard 500 and Federated Max-cap
Assuming the 90 days horizon Vanguard 500 Index is expected to generate about the same return on investment as Federated Max Cap Index. However, Vanguard 500 is 1.01 times more volatile than Federated Max Cap Index. It trades about 0.21 of its potential returns per unit of risk. Federated Max Cap Index is currently producing about 0.22 per unit of risk. If you would invest 800.00 in Federated Max Cap Index on June 8, 2025 and sell it today you would earn a total of 66.00 from holding Federated Max Cap Index or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Federated Max Cap Index
Performance |
| Timeline |
| Vanguard 500 Index |
| Federated Max Cap |
Vanguard 500 and Federated Max-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Federated Max-cap
The main advantage of trading using opposite Vanguard 500 and Federated Max-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Federated Max-cap 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 Federated Max-cap will offset losses from the drop in Federated Max-cap's long position.| Vanguard 500 vs. Vanguard Total International | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Value Index | Vanguard 500 vs. Vanguard Developed Markets |
| Federated Max-cap vs. Federated Emerging Market | Federated Max-cap vs. Federated Mdt All | Federated Max-cap vs. Federated Mdt Balanced | Federated Max-cap vs. Federated Global 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |