Correlation Between SPDR SPASX and Vanguard Australian
Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and Vanguard Australian 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 SPDR SPASX and Vanguard Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SPASX 200 and Vanguard Australian Property, you can compare the effects of market volatilities on SPDR SPASX and Vanguard Australian 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 SPDR SPASX with a short position of Vanguard Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and Vanguard Australian.
Diversification Opportunities for SPDR SPASX and Vanguard Australian
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and Vanguard Australian Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Australian and SPDR SPASX 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 SPDR SPASX 200 are associated (or correlated) with Vanguard Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Australian has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and Vanguard Australian go up and down completely randomly.
Pair Corralation between SPDR SPASX and Vanguard Australian
Assuming the 90 days trading horizon SPDR SPASX 200 is expected to generate 0.97 times more return on investment than Vanguard Australian. However, SPDR SPASX 200 is 1.04 times less risky than Vanguard Australian. It trades about 0.17 of its potential returns per unit of risk. Vanguard Australian Property is currently generating about 0.11 per unit of risk. If you would invest 1,361 in SPDR SPASX 200 on August 29, 2024 and sell it today you would earn a total of 61.00 from holding SPDR SPASX 200 or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SPASX 200 vs. Vanguard Australian Property
Performance |
| Timeline |
| SPDR SPASX 200 |
| Vanguard Australian |
SPDR SPASX and Vanguard Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SPASX and Vanguard Australian
The main advantage of trading using opposite SPDR SPASX and Vanguard Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX position performs unexpectedly, Vanguard Australian 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 Vanguard Australian will offset losses from the drop in Vanguard Australian's long position.| SPDR SPASX vs. SPDR SP 500 | SPDR SPASX vs. iShares Core SP | SPDR SPASX vs. Vanguard Total Market | SPDR SPASX vs. iShares Core SP |
| Vanguard Australian vs. Vanguard Global Minimum | Vanguard Australian vs. Vanguard Global Aggregate | Vanguard Australian vs. Vanguard Australian Fixed | Vanguard Australian vs. Vanguard Global Infrastructure |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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