Correlation Between Vanguard Mid-cap and Vanguard Large-cap
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid-cap and Vanguard Large-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 Mid-cap and Vanguard Large-cap 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 Large Cap Index, you can compare the effects of market volatilities on Vanguard Mid-cap and Vanguard Large-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 Mid-cap with a short position of Vanguard Large-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid-cap and Vanguard Large-cap.
Diversification Opportunities for Vanguard Mid-cap and Vanguard Large-cap
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and Vanguard Large Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Large Cap 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 Large-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 Large Cap has no effect on the direction of Vanguard Mid-cap i.e., Vanguard Mid-cap and Vanguard Large-cap go up and down completely randomly.
Pair Corralation between Vanguard Mid-cap and Vanguard Large-cap
Assuming the 90 days horizon Vanguard Mid Cap Value is expected to generate 0.83 times more return on investment than Vanguard Large-cap. However, Vanguard Mid Cap Value is 1.21 times less risky than Vanguard Large-cap. It trades about -0.14 of its potential returns per unit of risk. Vanguard Large Cap Index is currently generating about -0.19 per unit of risk. If you would invest 8,548 in Vanguard Mid Cap Value on December 4, 2024 and sell it today you would lose (191.00) from holding Vanguard Mid Cap Value or give up 2.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Mid Cap Value vs. Vanguard Large Cap Index
Performance |
Timeline |
Vanguard Mid Cap |
Vanguard Large Cap |
Vanguard Mid-cap and Vanguard Large-cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Mid-cap and Vanguard Large-cap
The main advantage of trading using opposite Vanguard Mid-cap and Vanguard Large-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid-cap position performs unexpectedly, Vanguard Large-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 Large-cap will offset losses from the drop in Vanguard Large-cap's long position.Vanguard Mid-cap vs. Vanguard Small Cap Value | Vanguard Mid-cap vs. Vanguard Mid Cap Growth | Vanguard Mid-cap vs. Vanguard Value Index | Vanguard Mid-cap vs. Vanguard Small Cap Growth |
Vanguard Large-cap vs. Artisan High Income | Vanguard Large-cap vs. Msift High Yield | Vanguard Large-cap vs. Dunham High Yield | Vanguard Large-cap vs. Virtus High Yield |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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