Correlation Between Schwartz Value and Vanguard Mid-cap

Can any of the company-specific risk be diversified away by investing in both Schwartz Value 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 Schwartz Value 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 Schwartz Value Focused and Vanguard Mid Cap Index, you can compare the effects of market volatilities on Schwartz Value 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 Schwartz Value with a short position of Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwartz Value and Vanguard Mid-cap.

Diversification Opportunities for Schwartz Value and Vanguard Mid-cap

0.84

Correlation Coefficient

Schwartz Value  Vanguard Mid-cap

Very poor diversification

The 3 months correlation between Schwartz and Vanguard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Schwartz Value Focused 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 Schwartz Value 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 Schwartz Value Focused 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 Schwartz Value i.e., Schwartz Value and Vanguard Mid-cap go up and down completely randomly.

Pair Corralation between Schwartz Value and Vanguard Mid-cap

Assuming the 90 days horizon Schwartz Value Focused is expected to under-perform the Vanguard Mid-cap. In addition to that, Schwartz Value is 2.8 times more volatile than Vanguard Mid Cap Index. It trades about 0.0 of its total potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.05 per unit of volatility. If you would invest  36,060  in Vanguard Mid Cap Index on October 21, 2024 and sell it today you would earn a total of  880.00  from holding Vanguard Mid Cap Index or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Schwartz Value Focused  vs.  Vanguard Mid Cap Index

Schwartz Value Focused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwartz Value Focused has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Schwartz Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Mid Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Index are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Mid-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Schwartz Value and Vanguard Mid-cap

The main advantage of trading using opposite Schwartz Value and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwartz Value 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 Schwartz Value Focused 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .