Correlation Between Vanguard and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both Vanguard and SPDR Russell 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 Russell 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 Russell Small, you can compare the effects of market volatilities on Vanguard and SPDR Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and SPDR Russell.
Diversification Opportunities for Vanguard and SPDR Russell
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Mid Cap and SPDR Russell Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell Small 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell Small has no effect on the direction of Vanguard i.e., Vanguard and SPDR Russell go up and down completely randomly.
Pair Corralation between Vanguard and SPDR Russell
Given the investment horizon of 90 days Vanguard SP Mid Cap is expected to generate about the same return on investment as SPDR Russell Small. However, Vanguard is 1.0 times more volatile than SPDR Russell Small. It trades about 0.07 of its potential returns per unit of risk. SPDR Russell Small is currently producing about 0.07 per unit of risk. If you would invest 4,213 in SPDR Russell Small on August 28, 2024 and sell it today you would earn a total of 1,743 from holding SPDR Russell Small or generate 41.37% 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 Russell Small
Performance |
| Timeline |
| Vanguard SP Mid |
| SPDR Russell Small |
Vanguard and SPDR Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and SPDR Russell
The main advantage of trading using opposite Vanguard and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, SPDR Russell 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 Russell will offset losses from the drop in SPDR Russell'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 Russell vs. SPDR Portfolio SP | SPDR Russell vs. SPDR SP World | SPDR Russell vs. SPDR Portfolio SP | SPDR Russell vs. SPDR Portfolio Emerging |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |