Correlation Between Vanguard and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both Vanguard and SPDR Kensho 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 and SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP Mid Cap and SPDR Kensho New, you can compare the effects of market volatilities on Vanguard and SPDR Kensho 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 with a short position of SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and SPDR Kensho.
Diversification Opportunities for Vanguard and SPDR Kensho
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Mid Cap and SPDR Kensho New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho New and Vanguard 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 SP Mid Cap are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho New has no effect on the direction of Vanguard i.e., Vanguard and SPDR Kensho go up and down completely randomly.
Pair Corralation between Vanguard and SPDR Kensho
Given the investment horizon of 90 days Vanguard is expected to generate 1.29 times less return on investment than SPDR Kensho. But when comparing it to its historical volatility, Vanguard SP Mid Cap is 1.3 times less risky than SPDR Kensho. It trades about 0.21 of its potential returns per unit of risk. SPDR Kensho New is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,934 in SPDR Kensho New on August 24, 2024 and sell it today you would earn a total of 329.00 from holding SPDR Kensho New or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP Mid Cap vs. SPDR Kensho New
Performance |
| Timeline |
| Vanguard SP Mid |
| SPDR Kensho New |
Vanguard and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and SPDR Kensho
The main advantage of trading using opposite Vanguard and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, SPDR Kensho 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 Kensho will offset losses from the drop in SPDR Kensho's long position.| Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard Russell 2000 |
| SPDR Kensho vs. Vanguard Mid Cap Growth | SPDR Kensho vs. ARK Innovation ETF | SPDR Kensho vs. iShares SP Mid Cap | SPDR Kensho vs. iShares Morningstar Mid Cap |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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