Correlation Between Vanguard Mid-cap and Vanguard Short-term
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Vanguard Short-term 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 Mid-cap and Vanguard Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Mid Cap Value and Vanguard Short Term Investment Grade, you can compare the effects of market volatilities on Vanguard Mid-cap and Vanguard Short-term 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 Mid-cap with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Vanguard Short-term.
Diversification Opportunities for Vanguard Mid-cap and Vanguard Short-term
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and Vanguard Short Term Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Vanguard 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 Vanguard Mid Cap Value are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Vanguard Short-term go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Vanguard Short-term
Assuming the 90 days horizon Vanguard Mid Cap Value is expected to generate 4.56 times more return on investment than Vanguard Short-term. However, Vanguard Mid-cap is 4.56 times more volatile than Vanguard Short Term Investment Grade. It trades about 0.15 of its potential returns per unit of risk. Vanguard Short Term Investment Grade is currently generating about 0.19 per unit of risk. If you would invest 8,378 in Vanguard Mid Cap Value on June 3, 2025 and sell it today you would earn a total of 574.00 from holding Vanguard Mid Cap Value or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Value vs. Vanguard Short Term Investment
Performance |
| Timeline |
| Vanguard Mid Cap |
| Vanguard Short Term |
Vanguard Mid-cap and Vanguard Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Vanguard Short-term
The main advantage of trading using opposite Vanguard Mid-cap and Vanguard Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Vanguard Short-term 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 Short-term will offset losses from the drop in Vanguard Short-term's long position.| Vanguard Mid-cap vs. Vanguard Small Cap Value | Vanguard Mid-cap vs. Vanguard Mid Cap Growth | Vanguard Mid-cap vs. Vanguard Value Index | Vanguard Mid-cap vs. Vanguard Small Cap Growth |
| Vanguard Short-term vs. Ab Global Risk | Vanguard Short-term vs. Ab High Income | Vanguard Short-term vs. T Rowe Price | Vanguard Short-term vs. Ab Global Risk |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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