Correlation Between SPDR Portfolio and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Vanguard Total 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 Portfolio and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Aggregate and Vanguard Total Bond, you can compare the effects of market volatilities on SPDR Portfolio and Vanguard Total 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 Portfolio with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Vanguard Total.
Diversification Opportunities for SPDR Portfolio and Vanguard Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond and SPDR Portfolio 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 Portfolio Aggregate are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Vanguard Total go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Vanguard Total
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.02 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, SPDR Portfolio Aggregate is 1.03 times less risky than Vanguard Total. It trades about 0.03 of its potential returns per unit of risk. Vanguard Total Bond is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,895 in Vanguard Total Bond on August 23, 2024 and sell it today you would earn a total of 361.00 from holding Vanguard Total Bond or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Aggregate vs. Vanguard Total Bond
Performance |
| Timeline |
| SPDR Portfolio Aggregate |
| Vanguard Total Bond |
SPDR Portfolio and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Vanguard Total
The main advantage of trading using opposite SPDR Portfolio and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Barclays Intermediate | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio Emerging |
| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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