Correlation Between Vanguard Emerging and Vanguard Mid-cap
Can any of the company-specific risk be diversified away by investing in both Vanguard Emerging and Vanguard Mid-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 Emerging and Vanguard Mid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Emerging Markets and Vanguard Mid Cap Value, you can compare the effects of market volatilities on Vanguard Emerging and Vanguard Mid-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 Emerging with a short position of Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Emerging and Vanguard Mid-cap.
Diversification Opportunities for Vanguard Emerging and Vanguard Mid-cap
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Vanguard Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap and Vanguard Emerging 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 Emerging Markets are associated (or correlated) with Vanguard Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Vanguard Mid-cap go up and down completely randomly.
Pair Corralation between Vanguard Emerging and Vanguard Mid-cap
Assuming the 90 days horizon Vanguard Emerging Markets is expected to generate 0.88 times more return on investment than Vanguard Mid-cap. However, Vanguard Emerging Markets is 1.14 times less risky than Vanguard Mid-cap. It trades about 0.09 of its potential returns per unit of risk. Vanguard Mid Cap Value is currently generating about 0.05 per unit of risk. If you would invest 2,233 in Vanguard Emerging Markets on March 13, 2025 and sell it today you would earn a total of 170.00 from holding Vanguard Emerging Markets or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Emerging Markets vs. Vanguard Mid Cap Value
Performance |
| Timeline |
| Vanguard Emerging Markets |
| Vanguard Mid Cap |
Vanguard Emerging and Vanguard Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Emerging and Vanguard Mid-cap
The main advantage of trading using opposite Vanguard Emerging and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Emerging position performs unexpectedly, Vanguard Mid-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 Vanguard Mid-cap will offset losses from the drop in Vanguard Mid-cap's long position.| Vanguard Emerging vs. Sprott Gold Equity | Vanguard Emerging vs. Global Gold Fund | Vanguard Emerging vs. Deutsche Gold Precious | Vanguard Emerging vs. International Investors Gold |
| Vanguard Mid-cap vs. Virtus Multi Sector Short | Vanguard Mid-cap vs. Quantitative Longshort Equity | Vanguard Mid-cap vs. Transamerica Short Term Bond | Vanguard Mid-cap vs. Barings Active Short |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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