Correlation Between Vanguard Mid and Apple
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Vanguard Mid and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Apple.
Diversification Opportunities for Vanguard Mid and Apple
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Apple is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Apple go up and down completely randomly.
Pair Corralation between Vanguard Mid and Apple
Assuming the 90 days horizon Vanguard Mid is expected to generate 1.13 times less return on investment than Apple. But when comparing it to its historical volatility, Vanguard Mid Cap Index is 1.41 times less risky than Apple. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 14,713 in Apple Inc on January 21, 2024 and sell it today you would earn a total of 1,787 from holding Apple Inc or generate 12.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Apple Inc
Performance |
| Timeline |
| Vanguard Mid Cap |
| Apple Inc |
Vanguard Mid and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Apple
The main advantage of trading using opposite Vanguard Mid and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Vanguard Mid vs. Vanguard Total International | Vanguard Mid vs. Vanguard Total Bond | Vanguard Mid vs. Vanguard Institutional Index | Vanguard Mid vs. Vanguard Institutional Index |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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