Correlation Between Vanguard Bond and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Vanguard Bond and SPDR SP 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 Bond and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Bond Index and SPDR SP 500, you can compare the effects of market volatilities on Vanguard Bond and SPDR SP 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 Bond with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Bond and SPDR SP.
Diversification Opportunities for Vanguard Bond and SPDR SP
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and SPDR is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Bond Index and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and Vanguard Bond 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 Bond Index are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of Vanguard Bond i.e., Vanguard Bond and SPDR SP go up and down completely randomly.
Pair Corralation between Vanguard Bond and SPDR SP
Assuming the 90 days trading horizon Vanguard Bond is expected to generate 2.37 times less return on investment than SPDR SP. In addition to that, Vanguard Bond is 2.86 times more volatile than SPDR SP 500. It trades about 0.02 of its total potential returns per unit of risk. SPDR SP 500 is currently generating about 0.12 per unit of volatility. If you would invest 718,411 in SPDR SP 500 on September 24, 2024 and sell it today you would earn a total of 468,567 from holding SPDR SP 500 or generate 65.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.65% |
| Values | Daily Returns |
Vanguard Bond Index vs. SPDR SP 500
Performance |
| Timeline |
| Vanguard Bond Index |
| SPDR SP 500 |
Vanguard Bond and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Bond and SPDR SP
The main advantage of trading using opposite Vanguard Bond and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Bond position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Vanguard Bond vs. Vanguard Funds Public | Vanguard Bond vs. Vanguard Specialized Funds | Vanguard Bond vs. Vanguard World | Vanguard Bond vs. Vanguard Index Funds |
| SPDR SP vs. Vanguard Index Funds | SPDR SP vs. Vanguard Index Funds | SPDR SP vs. Vanguard STAR Funds | SPDR SP vs. iShares Trust |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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