Correlation Between SPDR SP and Vanguard Information
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Vanguard Information 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 Information 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 Information Technology, you can compare the effects of market volatilities on SPDR SP and Vanguard Information 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 Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Vanguard Information.
Diversification Opportunities for SPDR SP and Vanguard Information
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information 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 Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of SPDR SP i.e., SPDR SP and Vanguard Information go up and down completely randomly.
Pair Corralation between SPDR SP and Vanguard Information
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 0.61 times more return on investment than Vanguard Information. However, SPDR SP 500 is 1.64 times less risky than Vanguard Information. It trades about 0.15 of its potential returns per unit of risk. Vanguard Information Technology is currently generating about 0.04 per unit of risk. If you would invest 58,177 in SPDR SP 500 on August 30, 2024 and sell it today you would earn a total of 1,706 from holding SPDR SP 500 or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPDR SP 500 vs. Vanguard Information Technolog
Performance |
| Timeline |
| SPDR SP 500 |
| Vanguard Information |
SPDR SP and Vanguard Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Vanguard Information
The main advantage of trading using opposite SPDR SP and Vanguard Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Vanguard Information 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 Information will offset losses from the drop in Vanguard Information's long position.| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
| Vanguard Information vs. Vanguard Health Care | Vanguard Information vs. Vanguard Growth Index | Vanguard Information vs. Vanguard Consumer Discretionary | Vanguard Information vs. Vanguard Financials Index |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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