Correlation Between Vanguard Mid and Global X

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

Diversification Opportunities for Vanguard Mid and Global X

0.89

Correlation Coefficient

Vanguard Mid  Global X

Very poor diversification

The 3 months correlation between Vanguard and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and Global X Adaptive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Adaptive 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 Value are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Adaptive has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Global X go up and down completely randomly.

Pair Corralation between Vanguard Mid and Global X

Considering the 90-day investment horizon Vanguard Mid Cap Value is expected to under-perform the Global X. In addition to that, Vanguard Mid is 1.12 times more volatile than Global X Adaptive. It trades about -0.28 of its total potential returns per unit of risk. Global X Adaptive is currently generating about -0.23 per unit of volatility. If you would invest  4,373  in Global X Adaptive on October 8, 2024 and sell it today you would lose (152.00) from holding Global X Adaptive or give up 3.48% of portfolio value over 90 days.

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

Vanguard Mid Cap Value  vs.  Global X Adaptive

Vanguard Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X Adaptive

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Adaptive are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard Mid and Global X

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

The idea behind Vanguard Mid Cap Value and Global X Adaptive 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.