Correlation Between Vanguard Mid and Intrepid Income

Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and Intrepid Income 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 Intrepid Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Mid Cap Index and Intrepid Income Fund, you can compare the effects of market volatilities on Vanguard Mid and Intrepid Income 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 Intrepid Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Intrepid Income.

Diversification Opportunities for Vanguard Mid and Intrepid Income

0.92

Correlation Coefficient

Vanguard Mid  Intrepid Income

Almost no diversification

The 3 months correlation between Vanguard and Intrepid is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Intrepid Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Income 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 Index are associated (or correlated) with Intrepid Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Income has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Intrepid Income go up and down completely randomly.

Pair Corralation between Vanguard Mid and Intrepid Income

Assuming the 90 days horizon Vanguard Mid Cap Index is expected to generate 5.69 times more return on investment than Intrepid Income. However, Vanguard Mid is 5.69 times more volatile than Intrepid Income Fund. It trades about 0.16 of its potential returns per unit of risk. Intrepid Income Fund is currently generating about 0.23 per unit of risk. If you would invest  7,051  in Vanguard Mid Cap Index on September 16, 2024 and sell it today you would earn a total of  511.00  from holding Vanguard Mid Cap Index or generate 7.25% 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 Index  vs.  Intrepid Income Fund

Vanguard Mid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Index are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intrepid Income

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Income Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intrepid Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Mid and Intrepid Income

The main advantage of trading using opposite Vanguard Mid and Intrepid Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, Intrepid Income 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 Intrepid Income will offset losses from the drop in Intrepid Income's long position.

The idea behind Vanguard Mid Cap Index and Intrepid Income Fund 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.