Correlation Between SPDR Portfolio and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Vanguard FTSE 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 FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Emerging and Vanguard FTSE Emerging, you can compare the effects of market volatilities on SPDR Portfolio and Vanguard FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Vanguard FTSE.
Diversification Opportunities for SPDR Portfolio and Vanguard FTSE
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 Emerging and Vanguard FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Emerging 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 Emerging are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Emerging has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Vanguard FTSE go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Vanguard FTSE
Given the investment horizon of 90 days SPDR Portfolio Emerging is expected to generate 0.97 times more return on investment than Vanguard FTSE. However, SPDR Portfolio Emerging is 1.03 times less risky than Vanguard FTSE. It trades about -0.16 of its potential returns per unit of risk. Vanguard FTSE Emerging is currently generating about -0.17 per unit of risk. If you would invest 4,067 in SPDR Portfolio Emerging on August 24, 2024 and sell it today you would lose (136.00) from holding SPDR Portfolio Emerging or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Emerging vs. Vanguard FTSE Emerging
Performance |
| Timeline |
| SPDR Portfolio Emerging |
| Vanguard FTSE Emerging |
SPDR Portfolio and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Vanguard FTSE
The main advantage of trading using opposite SPDR Portfolio and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE's long position.| SPDR Portfolio vs. iShares International Developed | SPDR Portfolio vs. iShares MSCI Emerging | SPDR Portfolio vs. iShares MSCI Frontier | SPDR Portfolio vs. iShares MSCI Emerging |
| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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