Correlation Between Vanguard Total and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and SPDR SSGA 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 Total and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and SPDR SSGA Small, you can compare the effects of market volatilities on Vanguard Total and SPDR SSGA 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 Total with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and SPDR SSGA.
Diversification Opportunities for Vanguard Total and SPDR SSGA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and SPDR is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and SPDR SSGA Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Small and Vanguard Total 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 Total Bond are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Small has no effect on the direction of Vanguard Total i.e., Vanguard Total and SPDR SSGA go up and down completely randomly.
Pair Corralation between Vanguard Total and SPDR SSGA
Considering the 90-day investment horizon Vanguard Total is expected to generate 5.55 times less return on investment than SPDR SSGA. But when comparing it to its historical volatility, Vanguard Total Bond is 2.98 times less risky than SPDR SSGA. It trades about 0.03 of its potential returns per unit of risk. SPDR SSGA Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,442 in SPDR SSGA Small on August 28, 2024 and sell it today you would earn a total of 3,522 from holding SPDR SSGA Small or generate 33.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. SPDR SSGA Small
Performance |
| Timeline |
| Vanguard Total Bond |
| SPDR SSGA Small |
Vanguard Total and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and SPDR SSGA
The main advantage of trading using opposite Vanguard Total and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, SPDR SSGA 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 SSGA will offset losses from the drop in SPDR SSGA's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
| SPDR SSGA vs. SPDR SSGA Large | SPDR SSGA vs. Invesco SP SmallCap | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. SPDR MSCI EAFE |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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