Correlation Between Vanguard Small and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and SPDR SSGA 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 Vanguard Small and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and SPDR SSGA Small, you can compare the effects of market volatilities on Vanguard Small and SPDR SSGA 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 Vanguard Small with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and SPDR SSGA.
Diversification Opportunities for Vanguard Small and SPDR SSGA
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and SPDR SSGA Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Small and Vanguard Small 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 Vanguard Small Cap Index are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Small has no effect on the direction of Vanguard Small i.e., Vanguard Small and SPDR SSGA go up and down completely randomly.
Pair Corralation between Vanguard Small and SPDR SSGA
Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to generate 0.91 times more return on investment than SPDR SSGA. However, Vanguard Small Cap Index is 1.1 times less risky than SPDR SSGA. It trades about 0.07 of its potential returns per unit of risk. SPDR SSGA Small is currently generating about 0.06 per unit of risk. If you would invest 18,245 in Vanguard Small Cap Index on August 28, 2024 and sell it today you would earn a total of 7,913 from holding Vanguard Small Cap Index or generate 43.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. SPDR SSGA Small
Performance |
| Timeline |
| Vanguard Small Cap |
| SPDR SSGA Small |
Vanguard Small and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and SPDR SSGA
The main advantage of trading using opposite Vanguard Small and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, SPDR SSGA 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 SPDR SSGA will offset losses from the drop in SPDR SSGA's long position.| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
| SPDR SSGA vs. SPDR SSGA Large | SPDR SSGA vs. Invesco SP SmallCap | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. SPDR MSCI EAFE |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |