Correlation Between Sp 500 and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Sp 500 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 Sp 500 and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp 500 Index and Vanguard Total Stock, you can compare the effects of market volatilities on Sp 500 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 Sp 500 with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and Vanguard Total.
Diversification Opportunities for Sp 500 and Vanguard Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPFIX and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Index and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Sp 500 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 Sp 500 Index 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 Stock has no effect on the direction of Sp 500 i.e., Sp 500 and Vanguard Total go up and down completely randomly.
Pair Corralation between Sp 500 and Vanguard Total
Assuming the 90 days horizon Sp 500 is expected to generate 1.31 times less return on investment than Vanguard Total. In addition to that, Sp 500 is 1.08 times more volatile than Vanguard Total Stock. It trades about 0.09 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.13 per unit of volatility. If you would invest 20,030 in Vanguard Total Stock on August 29, 2024 and sell it today you would earn a total of 7,200 from holding Vanguard Total Stock or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp 500 Index vs. Vanguard Total Stock
Performance |
| Timeline |
| Sp 500 Index |
| Vanguard Total Stock |
Sp 500 and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp 500 and Vanguard Total
The main advantage of trading using opposite Sp 500 and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 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.| Sp 500 vs. Vanguard Total Stock | Sp 500 vs. Vanguard 500 Index | Sp 500 vs. Vanguard Total Stock | Sp 500 vs. Vanguard Total Stock |
| Vanguard Total vs. California Bond Fund | Vanguard Total vs. Icon Bond Fund | Vanguard Total vs. Dreyfusstandish Global Fixed | Vanguard Total vs. Ab Global Bond |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |