Correlation Between SPDR SP and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both SPDR SP and VanEck Vectors 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 SP and VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and VanEck Vectors Small, you can compare the effects of market volatilities on SPDR SP and VanEck Vectors 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 SP with a short position of VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and VanEck Vectors.
Diversification Opportunities for SPDR SP and VanEck Vectors
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPDR and VanEck is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and VanEck Vectors Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors Small and SPDR SP 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 SP 500 are associated (or correlated) with VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors Small has no effect on the direction of SPDR SP i.e., SPDR SP and VanEck Vectors go up and down completely randomly.
Pair Corralation between SPDR SP and VanEck Vectors
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 0.81 times more return on investment than VanEck Vectors. However, SPDR SP 500 is 1.24 times less risky than VanEck Vectors. It trades about 0.13 of its potential returns per unit of risk. VanEck Vectors Small is currently generating about 0.03 per unit of risk. If you would invest 57,913 in SPDR SP 500 on August 26, 2024 and sell it today you would earn a total of 33,296 from holding SPDR SP 500 or generate 57.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. VanEck Vectors Small
Performance |
| Timeline |
| SPDR SP 500 |
| VanEck Vectors Small |
SPDR SP and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and VanEck Vectors
The main advantage of trading using opposite SPDR SP and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, VanEck Vectors 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 VanEck Vectors will offset losses from the drop in VanEck Vectors' long position.| SPDR SP vs. BetaShares Global Banks | SPDR SP vs. Beta Shares SPASX | SPDR SP vs. SPDR SPASX 200 | SPDR SP vs. Vanguard Australian Property |
| VanEck Vectors vs. iShares Core SP | VanEck Vectors vs. iShares CoreSP MidCap | VanEck Vectors vs. SPDR SP 500 | VanEck Vectors vs. iShares Core SP |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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