Correlation Between Vanguard Mid-cap and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard 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 Vanguard Mid Cap Value and Vanguard Emerging Markets, you can compare the effects of market volatilities on Vanguard 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 Vanguard Mid-cap with a short position of Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Vanguard Emerging.
Diversification Opportunities for Vanguard Mid-cap and Vanguard Emerging
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 Mid Cap Value 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 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 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 Vanguard Mid-cap i.e., Vanguard Mid-cap and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Vanguard Emerging
Assuming the 90 days horizon Vanguard Mid-cap is expected to generate 3.89 times less return on investment than Vanguard Emerging. In addition to that, Vanguard Mid-cap is 1.77 times more volatile than Vanguard Emerging Markets. It trades about 0.04 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about 0.3 per unit of volatility. If you would invest 2,334 in Vanguard Emerging Markets on March 13, 2025 and sell it today you would earn a total of 69.00 from holding Vanguard Emerging Markets or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Value vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Vanguard Mid Cap |
| Vanguard Emerging Markets |
Vanguard Mid-cap and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid-cap and Vanguard Emerging
The main advantage of trading using opposite Vanguard Mid-cap and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| 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 |
| Vanguard Emerging vs. Sprott Gold Equity | Vanguard Emerging vs. Global Gold Fund | Vanguard Emerging vs. Deutsche Gold Precious | Vanguard Emerging vs. International Investors Gold |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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