Correlation Between Vanguard Global and SPDR SPASX
Can any of the company-specific risk be diversified away by investing in both Vanguard Global and SPDR SPASX 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 Global and SPDR SPASX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Global Infrastructure and SPDR SPASX 200, you can compare the effects of market volatilities on Vanguard Global and SPDR SPASX 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 Global with a short position of SPDR SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and SPDR SPASX.
Diversification Opportunities for Vanguard Global and SPDR SPASX
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and SPDR is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Infrastructure and SPDR SPASX 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SPASX 200 and Vanguard Global 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 Global Infrastructure are associated (or correlated) with SPDR SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SPASX 200 has no effect on the direction of Vanguard Global i.e., Vanguard Global and SPDR SPASX go up and down completely randomly.
Pair Corralation between Vanguard Global and SPDR SPASX
Assuming the 90 days trading horizon Vanguard Global Infrastructure is expected to generate 1.58 times more return on investment than SPDR SPASX. However, Vanguard Global is 1.58 times more volatile than SPDR SPASX 200. It trades about 0.18 of its potential returns per unit of risk. SPDR SPASX 200 is currently generating about 0.2 per unit of risk. If you would invest 7,031 in Vanguard Global Infrastructure on August 29, 2024 and sell it today you would earn a total of 265.00 from holding Vanguard Global Infrastructure or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Global Infrastructure vs. SPDR SPASX 200
Performance |
| Timeline |
| Vanguard Global Infr |
| SPDR SPASX 200 |
Vanguard Global and SPDR SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Global and SPDR SPASX
The main advantage of trading using opposite Vanguard Global and SPDR SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Global position performs unexpectedly, SPDR SPASX 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 SPASX will offset losses from the drop in SPDR SPASX's long position.| Vanguard Global vs. BetaShares Geared Australian | Vanguard Global vs. BetaShares Global Robotics | Vanguard Global vs. iShares China LargeCap | Vanguard Global vs. Russell Australian Government |
| SPDR SPASX vs. SPDR SP 500 | SPDR SPASX vs. Vanguard Total Market | SPDR SPASX vs. iShares Core SP | SPDR SPASX vs. iShares Core SP |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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