Correlation Between SPDR SP and Vanguard Mortgage
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Vanguard Mortgage 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 Mortgage 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 Mortgage Backed Securities, you can compare the effects of market volatilities on SPDR SP and Vanguard Mortgage 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 Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Vanguard Mortgage.
Diversification Opportunities for SPDR SP and Vanguard Mortgage
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPDR and Vanguard is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Vanguard Mortgage Backed Secur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mortgage 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 Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mortgage has no effect on the direction of SPDR SP i.e., SPDR SP and Vanguard Mortgage go up and down completely randomly.
Pair Corralation between SPDR SP and Vanguard Mortgage
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 2.27 times more return on investment than Vanguard Mortgage. However, SPDR SP is 2.27 times more volatile than Vanguard Mortgage Backed Securities. It trades about 0.14 of its potential returns per unit of risk. Vanguard Mortgage Backed Securities is currently generating about -0.17 per unit of risk. If you would invest 57,004 in SPDR SP 500 on August 26, 2024 and sell it today you would earn a total of 2,547 from holding SPDR SP 500 or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Vanguard Mortgage Backed Secur
Performance |
| Timeline |
| SPDR SP 500 |
| Vanguard Mortgage |
SPDR SP and Vanguard Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Vanguard Mortgage
The main advantage of trading using opposite SPDR SP and Vanguard Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Vanguard Mortgage 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 Mortgage will offset losses from the drop in Vanguard Mortgage'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 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |