Correlation Between Mid-cap Profund and Vanguard Financials

Can any of the company-specific risk be diversified away by investing in both Mid-cap Profund and Vanguard Financials 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 Mid-cap Profund and Vanguard Financials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap Profund Mid Cap and Vanguard Financials Index, you can compare the effects of market volatilities on Mid-cap Profund and Vanguard Financials 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 Mid-cap Profund with a short position of Vanguard Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap Profund and Vanguard Financials.

Diversification Opportunities for Mid-cap Profund and Vanguard Financials

0.98

Correlation Coefficient

Mid-cap Profund  Vanguard Financials

Almost no diversification

The 3 months correlation between Mid-cap and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Profund Mid Cap and Vanguard Financials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Financials Index and Mid-cap Profund 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 Mid Cap Profund Mid Cap are associated (or correlated) with Vanguard Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Financials Index has no effect on the direction of Mid-cap Profund i.e., Mid-cap Profund and Vanguard Financials go up and down completely randomly.

Pair Corralation between Mid-cap Profund and Vanguard Financials

Assuming the 90 days horizon Mid Cap Profund Mid Cap is expected to generate 1.08 times more return on investment than Vanguard Financials. However, Mid-cap Profund is 1.08 times more volatile than Vanguard Financials Index. It trades about 0.13 of its potential returns per unit of risk. Vanguard Financials Index is currently generating about 0.13 per unit of risk. If you would invest  12,044  in Mid Cap Profund Mid Cap on May 27, 2025 and sell it today you would earn a total of  884.00  from holding Mid Cap Profund Mid Cap or generate 7.34% return on investment over 90 days.

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

Mid Cap Profund Mid Cap  vs.  Vanguard Financials Index

Mid Cap Profund

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Profund Mid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mid-cap Profund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vanguard Financials Index

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Financials Index are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Financials may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Mid-cap Profund and Vanguard Financials

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

The idea behind Mid Cap Profund Mid Cap and Vanguard Financials Index 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.