Correlation Between SSgA SPDR and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both SSgA SPDR 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 SSgA SPDR and Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSgA SPDR ETFs and Vanguard FTSE Developed, you can compare the effects of market volatilities on SSgA SPDR 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 SSgA SPDR with a short position of Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and Vanguard FTSE.
Diversification Opportunities for SSgA SPDR and Vanguard FTSE
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SSgA and Vanguard is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed and SSgA SPDR 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 SSgA SPDR ETFs 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 Developed has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Vanguard FTSE go up and down completely randomly.
Pair Corralation between SSgA SPDR and Vanguard FTSE
Assuming the 90 days trading horizon SSgA SPDR ETFs is expected to under-perform the Vanguard FTSE. But the etf apears to be less risky and, when comparing its historical volatility, SSgA SPDR ETFs is 1.2 times less risky than Vanguard FTSE. The etf trades about -0.05 of its potential returns per unit of risk. The Vanguard FTSE Developed is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,972 in Vanguard FTSE Developed on January 18, 2025 and sell it today you would earn a total of 157.00 from holding Vanguard FTSE Developed or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSgA SPDR ETFs vs. Vanguard FTSE Developed
Performance |
| Timeline |
| SSgA SPDR ETFs |
| Vanguard FTSE Developed |
SSgA SPDR and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSgA SPDR and Vanguard FTSE
The main advantage of trading using opposite SSgA SPDR and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA SPDR 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.| SSgA SPDR vs. SSgA SPDR Barclays | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs | SSgA SPDR vs. SSgA SPDR ETFs |
| Vanguard FTSE vs. Vanguard USD Corporate | Vanguard FTSE vs. Vanguard Global Aggregate | Vanguard FTSE vs. Vanguard USD Corporate | Vanguard FTSE vs. Vanguard FTSE All World |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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