Correlation Between Vanguard Mid and Cabana Target

Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and Cabana Target 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 Cabana Target 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 Cabana Target Leading, you can compare the effects of market volatilities on Vanguard Mid and Cabana Target 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 Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Cabana Target.

Diversification Opportunities for Vanguard Mid and Cabana Target

0.81

Correlation Coefficient

Vanguard Mid  Cabana Target

Very poor diversification

The 3 months correlation between Vanguard and Cabana is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Cabana Target Leading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Leading 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Leading has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Cabana Target go up and down completely randomly.

Pair Corralation between Vanguard Mid and Cabana Target

Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to under-perform the Cabana Target. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Mid Cap Index is 1.01 times less risky than Cabana Target. The etf trades about -0.02 of its potential returns per unit of risk. The Cabana Target Leading is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,019  in Cabana Target Leading on December 19, 2024 and sell it today you would earn a total of  68.00  from holding Cabana Target Leading or generate 3.37% return on investment over 90 days.

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

Vanguard Mid Cap Index  vs.  Cabana Target Leading

Vanguard Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Mid Cap Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard Mid is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Cabana Target Leading

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cabana Target Leading are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cabana Target is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Mid and Cabana Target

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

The idea behind Vanguard Mid Cap Index and Cabana Target Leading 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 Commodity Directory module to find actively traded commodities issued by global exchanges.