Correlation Between SPDR SP and Vanguard Australian
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Vanguard Australian 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 Vanguard Australian 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 Vanguard Australian Shares, you can compare the effects of market volatilities on SPDR SP and Vanguard Australian 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 Vanguard Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Vanguard Australian.
Diversification Opportunities for SPDR SP and Vanguard Australian
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Vanguard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Vanguard Australian Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Australian 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 Vanguard Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Australian has no effect on the direction of SPDR SP i.e., SPDR SP and Vanguard Australian go up and down completely randomly.
Pair Corralation between SPDR SP and Vanguard Australian
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 0.99 times more return on investment than Vanguard Australian. However, SPDR SP 500 is 1.01 times less risky than Vanguard Australian. It trades about 0.17 of its potential returns per unit of risk. Vanguard Australian Shares is currently generating about 0.08 per unit of risk. If you would invest 69,123 in SPDR SP 500 on August 25, 2024 and sell it today you would earn a total of 22,086 from holding SPDR SP 500 or generate 31.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Vanguard Australian Shares
Performance |
| Timeline |
| SPDR SP 500 |
| Vanguard Australian |
SPDR SP and Vanguard Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Vanguard Australian
The main advantage of trading using opposite SPDR SP and Vanguard Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Vanguard Australian 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 Australian will offset losses from the drop in Vanguard Australian's 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 |
| Vanguard Australian vs. iShares Core SP | Vanguard Australian vs. iShares CoreSP MidCap | Vanguard Australian vs. SPDR SP 500 | Vanguard Australian 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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