Correlation Between Vanguard and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Vanguard and SPDR Dow 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 Dow 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 Dow Jones, you can compare the effects of market volatilities on Vanguard and SPDR Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and SPDR Dow.
Diversification Opportunities for Vanguard and SPDR Dow
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 Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Vanguard i.e., Vanguard and SPDR Dow go up and down completely randomly.
Pair Corralation between Vanguard and SPDR Dow
Given the investment horizon of 90 days Vanguard SP Mid Cap is expected to generate 1.24 times more return on investment than SPDR Dow. However, Vanguard is 1.24 times more volatile than SPDR Dow Jones. It trades about 0.29 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.25 per unit of risk. If you would invest 10,515 in Vanguard SP Mid Cap on August 26, 2024 and sell it today you would earn a total of 802.00 from holding Vanguard SP Mid Cap or generate 7.63% 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 Dow Jones
Performance |
| Timeline |
| Vanguard SP Mid |
| SPDR Dow Jones |
Vanguard and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and SPDR Dow
The main advantage of trading using opposite Vanguard and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow's long position.| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Small Cap |
| SPDR Dow vs. BlackRock ETF Trust | SPDR Dow vs. Rbb Fund | SPDR Dow vs. Virtus ETF Trust | SPDR Dow vs. Amplify CWP Enhanced |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |