Correlation Between Mid Cap and Vanguard Ftse

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

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

Diversification Opportunities for Mid Cap and Vanguard Ftse

0.91

Correlation Coefficient

Mid Cap  Vanguard Ftse

Almost no diversification

The 3 months correlation between Mid and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Vanguard Ftse All World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Ftse All and Mid Cap 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 Growth are associated (or correlated) with Vanguard Ftse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Ftse All has no effect on the direction of Mid Cap i.e., Mid Cap and Vanguard Ftse go up and down completely randomly.

Pair Corralation between Mid Cap and Vanguard Ftse

Assuming the 90 days horizon Mid Cap is expected to generate 1.87 times less return on investment than Vanguard Ftse. In addition to that, Mid Cap is 1.53 times more volatile than Vanguard Ftse All World. It trades about 0.1 of its total potential returns per unit of risk. Vanguard Ftse All World is currently generating about 0.28 per unit of volatility. If you would invest  23,992  in Vanguard Ftse All World on May 17, 2025 and sell it today you would earn a total of  2,514  from holding Vanguard Ftse All World or generate 10.48% 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 Growth  vs.  Vanguard Ftse All World

Mid Cap Growth

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Ftse All

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Ftse All World are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Ftse may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Mid Cap and Vanguard Ftse

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

The idea behind Mid Cap Growth and Vanguard Ftse All World 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.