Correlation Between Vanguard ESG and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Vanguard ESG and SPDR Portfolio 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 ESG and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard ESG Stock and SPDR Portfolio SP, you can compare the effects of market volatilities on Vanguard ESG and SPDR Portfolio 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 ESG with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard ESG and SPDR Portfolio.
Diversification Opportunities for Vanguard ESG and SPDR Portfolio
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard ESG Stock and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP and Vanguard ESG 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 ESG Stock are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Vanguard ESG i.e., Vanguard ESG and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Vanguard ESG and SPDR Portfolio
Given the investment horizon of 90 days Vanguard ESG Stock is expected to generate 1.12 times more return on investment than SPDR Portfolio. However, Vanguard ESG is 1.12 times more volatile than SPDR Portfolio SP. It trades about 0.11 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.09 per unit of risk. If you would invest 10,325 in Vanguard ESG Stock on August 23, 2024 and sell it today you would earn a total of 237.00 from holding Vanguard ESG Stock or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard ESG Stock vs. SPDR Portfolio SP
Performance |
| Timeline |
| Vanguard ESG Stock |
| SPDR Portfolio SP |
Vanguard ESG and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard ESG and SPDR Portfolio
The main advantage of trading using opposite Vanguard ESG and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard ESG position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.| Vanguard ESG vs. iShares ESG Aware | Vanguard ESG vs. iShares ESG Aware | Vanguard ESG vs. HUMANA INC | Vanguard ESG vs. Aquagold International |
| SPDR Portfolio vs. iShares ESG Aware | SPDR Portfolio vs. iShares ESG Aware | SPDR Portfolio vs. HUMANA INC | SPDR Portfolio vs. Aquagold International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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