Correlation Between SPDR Portfolio and Vanguard Growth
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Vanguard Growth 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 Portfolio and Vanguard Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and Vanguard Growth Index, you can compare the effects of market volatilities on SPDR Portfolio and Vanguard Growth 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 Portfolio with a short position of Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Vanguard Growth.
Diversification Opportunities for SPDR Portfolio and Vanguard Growth
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index and SPDR Portfolio 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 Portfolio SP are associated (or correlated) with Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Vanguard Growth go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Vanguard Growth
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.4 times less return on investment than Vanguard Growth. In addition to that, SPDR Portfolio is 1.01 times more volatile than Vanguard Growth Index. It trades about 0.09 of its total potential returns per unit of risk. Vanguard Growth Index is currently generating about 0.12 per unit of volatility. If you would invest 39,425 in Vanguard Growth Index on August 31, 2024 and sell it today you would earn a total of 1,147 from holding Vanguard Growth Index or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. Vanguard Growth Index
Performance |
| Timeline |
| SPDR Portfolio SP |
| Vanguard Growth Index |
SPDR Portfolio and Vanguard Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Vanguard Growth
The main advantage of trading using opposite SPDR Portfolio and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Vanguard Growth 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 Growth will offset losses from the drop in Vanguard Growth's long position.| SPDR Portfolio vs. Vanguard Growth Index | SPDR Portfolio vs. iShares Russell 1000 | SPDR Portfolio vs. iShares SP 500 | SPDR Portfolio vs. iShares Core SP |
| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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