Correlation Between Midcap ETF and US Brent

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Can any of the company-specific risk be diversified away by investing in both Midcap ETF and US Brent 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 Midcap ETF and US Brent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midcap ETF Vanguard and US Brent Oil, you can compare the effects of market volatilities on Midcap ETF and US Brent 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 Midcap ETF with a short position of US Brent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap ETF and US Brent.

Diversification Opportunities for Midcap ETF and US Brent

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Midcap and US Brent is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Midcap ETF Vanguard and US Brent Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Brent Oil and Midcap ETF 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 Midcap ETF Vanguard are associated (or correlated) with US Brent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Brent Oil has no effect on the direction of Midcap ETF i.e., Midcap ETF and US Brent go up and down completely randomly.

Pair Corralation between Midcap ETF and US Brent

Allowing for the 90-day total investment horizon Midcap ETF Vanguard is expected to generate 0.56 times more return on investment than US Brent. However, Midcap ETF Vanguard is 1.8 times less risky than US Brent. It trades about -0.05 of its potential returns per unit of risk. US Brent Oil is currently generating about -0.06 per unit of risk. If you would invest  19,986  in Midcap ETF Vanguard on July 2, 2022 and sell it today you would lose (1,030)  from holding Midcap ETF Vanguard or give up 5.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Midcap ETF Vanguard  vs.  US Brent Oil

 Performance (%) 
       Timeline  
Midcap ETF Vanguard 
Midcap Performance
0 of 100
Over the last 90 days Midcap ETF Vanguard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Midcap ETF is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Midcap Price Channel

US Brent Oil 
US Brent Performance
0 of 100
Over the last 90 days US Brent Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

US Brent Price Channel

Midcap ETF and US Brent Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Midcap ETF and US Brent

The main advantage of trading using opposite Midcap ETF and US Brent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap ETF position performs unexpectedly, US Brent 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 US Brent will offset losses from the drop in US Brent's long position.
Midcap ETF vs. Merck Company
The idea behind Midcap ETF Vanguard and US Brent Oil 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.
US Brent vs. Bank Of America
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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