Correlation Between SPDR Barclays and Vanguard Intermediate
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Vanguard Intermediate 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 Barclays and Vanguard Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Long and Vanguard Intermediate Term Corporate, you can compare the effects of market volatilities on SPDR Barclays and Vanguard Intermediate 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 Barclays with a short position of Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Vanguard Intermediate.
Diversification Opportunities for SPDR Barclays and Vanguard Intermediate
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Long and Vanguard Intermediate Term Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate and SPDR Barclays 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 Barclays Long are associated (or correlated) with Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Vanguard Intermediate go up and down completely randomly.
Pair Corralation between SPDR Barclays and Vanguard Intermediate
Given the investment horizon of 90 days SPDR Barclays Long is expected to under-perform the Vanguard Intermediate. In addition to that, SPDR Barclays is 2.19 times more volatile than Vanguard Intermediate Term Corporate. It trades about -0.02 of its total potential returns per unit of risk. Vanguard Intermediate Term Corporate is currently generating about -0.04 per unit of volatility. If you would invest 8,129 in Vanguard Intermediate Term Corporate on August 27, 2024 and sell it today you would lose (27.00) from holding Vanguard Intermediate Term Corporate or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Long vs. Vanguard Intermediate Term Cor
Performance |
| Timeline |
| SPDR Barclays Long |
| Vanguard Intermediate |
SPDR Barclays and Vanguard Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Vanguard Intermediate
The main advantage of trading using opposite SPDR Barclays and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Vanguard Intermediate 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 Intermediate will offset losses from the drop in Vanguard Intermediate's long position.| SPDR Barclays vs. iShares 10 Year | SPDR Barclays vs. SPDR Barclays Intermediate | SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. FlexShares Credit Scored Long |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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