Correlation Between SPDR SP and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Vanguard Global 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 Global 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 Global ex US, you can compare the effects of market volatilities on SPDR SP and Vanguard Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Vanguard Global.
Diversification Opportunities for SPDR SP and Vanguard Global
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Vanguard is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Vanguard Global ex US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global ex 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global ex has no effect on the direction of SPDR SP i.e., SPDR SP and Vanguard Global go up and down completely randomly.
Pair Corralation between SPDR SP and Vanguard Global
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.05 times more return on investment than Vanguard Global. However, SPDR SP is 1.05 times more volatile than Vanguard Global ex US. It trades about 0.16 of its potential returns per unit of risk. Vanguard Global ex US is currently generating about -0.19 per unit of risk. If you would invest 58,083 in SPDR SP 500 on August 28, 2024 and sell it today you would earn a total of 1,670 from holding SPDR SP 500 or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Vanguard Global ex US
Performance |
| Timeline |
| SPDR SP 500 |
| Vanguard Global ex |
SPDR SP and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Vanguard Global
The main advantage of trading using opposite SPDR SP and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Vanguard Global 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 Global will offset losses from the drop in Vanguard Global'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 Global vs. Vanguard FTSE All World | Vanguard Global vs. Vanguard Real Estate | Vanguard Global vs. Vanguard Total International | Vanguard Global vs. Schwab REIT ETF |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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