Correlation Between Vanguard Mid and WisdomTree MidCap
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and WisdomTree MidCap 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 and WisdomTree MidCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Mid Cap Growth and WisdomTree MidCap Dividend, you can compare the effects of market volatilities on Vanguard Mid and WisdomTree MidCap 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 with a short position of WisdomTree MidCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and WisdomTree MidCap.
Diversification Opportunities for Vanguard Mid and WisdomTree MidCap
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and WisdomTree is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Growth and WisdomTree MidCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree MidCap and Vanguard Mid 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 Growth are associated (or correlated) with WisdomTree MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree MidCap has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and WisdomTree MidCap go up and down completely randomly.
Pair Corralation between Vanguard Mid and WisdomTree MidCap
Considering the 90-day investment horizon Vanguard Mid is expected to generate 3.41 times less return on investment than WisdomTree MidCap. But when comparing it to its historical volatility, Vanguard Mid Cap Growth is 1.16 times less risky than WisdomTree MidCap. It trades about 0.05 of its potential returns per unit of risk. WisdomTree MidCap Dividend is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,992 in WisdomTree MidCap Dividend on May 28, 2025 and sell it today you would earn a total of 284.00 from holding WisdomTree MidCap Dividend or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Growth vs. WisdomTree MidCap Dividend
Performance |
| Timeline |
| Vanguard Mid Cap |
| WisdomTree MidCap |
Vanguard Mid and WisdomTree MidCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and WisdomTree MidCap
The main advantage of trading using opposite Vanguard Mid and WisdomTree MidCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, WisdomTree MidCap 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 WisdomTree MidCap will offset losses from the drop in WisdomTree MidCap's long position.| Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Mid Cap Value | Vanguard Mid vs. Vanguard Small Cap Value | Vanguard Mid vs. Vanguard Mid Cap Index |
| WisdomTree MidCap vs. FT Vest Equity | WisdomTree MidCap vs. Northern Lights | WisdomTree MidCap vs. Dimensional International High | WisdomTree MidCap vs. JPMorgan Fundamental Data |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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