Correlation Between Vanguard Mid and CHIE

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

Diversification Opportunities for Vanguard Mid and CHIE

-0.67

Correlation Coefficient

Vanguard Mid  CHIE

Excellent diversification

The 3 months correlation between Vanguard and CHIE is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and CHIE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIE 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 CHIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIE has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and CHIE go up and down completely randomly.

Pair Corralation between Vanguard Mid and CHIE

If you would invest  26,137  in Vanguard Mid Cap Index on October 1, 2024 and sell it today you would earn a total of  544.00  from holding Vanguard Mid Cap Index or generate 2.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Vanguard Mid Cap Index  vs.  CHIE

Vanguard Mid Cap

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Index are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

CHIE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vanguard Mid and CHIE

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

The idea behind Vanguard Mid Cap Index and CHIE 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.