Correlation Between Vanguard Lifestrategy and Vanguard Mid-cap
Can any of the company-specific risk be diversified away by investing in both Vanguard Lifestrategy 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 Lifestrategy 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 Lifestrategy Servative and Vanguard Mid Cap Index, you can compare the effects of market volatilities on Vanguard Lifestrategy 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 Lifestrategy with a short position of Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Lifestrategy and Vanguard Mid-cap.
Diversification Opportunities for Vanguard Lifestrategy and Vanguard Mid-cap
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Lifestrategy Servativ and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap and Vanguard Lifestrategy 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 Lifestrategy Servative 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 Lifestrategy i.e., Vanguard Lifestrategy and Vanguard Mid-cap go up and down completely randomly.
Pair Corralation between Vanguard Lifestrategy and Vanguard Mid-cap
Assuming the 90 days horizon Vanguard Lifestrategy Servative is expected to generate 0.45 times more return on investment than Vanguard Mid-cap. However, Vanguard Lifestrategy Servative is 2.24 times less risky than Vanguard Mid-cap. It trades about 0.14 of its potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.02 per unit of risk. If you would invest 2,171 in Vanguard Lifestrategy Servative on August 18, 2025 and sell it today you would earn a total of 64.00 from holding Vanguard Lifestrategy Servative or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Lifestrategy Servativ vs. Vanguard Mid Cap Index
Performance |
| Timeline |
| Vanguard Lifestrategy |
| Vanguard Mid Cap |
Vanguard Lifestrategy and Vanguard Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Lifestrategy and Vanguard Mid-cap
The main advantage of trading using opposite Vanguard Lifestrategy and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Lifestrategy 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.The idea behind Vanguard Lifestrategy Servative and Vanguard Mid Cap Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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