Correlation Between Vanguard Small and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and SPDR SP 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 SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and SPDR SP International, you can compare the effects of market volatilities on Vanguard Small and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and SPDR SP.
Diversification Opportunities for Vanguard Small and SPDR SP
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and SPDR is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and SPDR SP International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP International 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 Value are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP International has no effect on the direction of Vanguard Small i.e., Vanguard Small and SPDR SP go up and down completely randomly.
Pair Corralation between Vanguard Small and SPDR SP
Considering the 90-day investment horizon Vanguard Small Cap Value is expected to generate 1.5 times more return on investment than SPDR SP. However, Vanguard Small is 1.5 times more volatile than SPDR SP International. It trades about 0.32 of its potential returns per unit of risk. SPDR SP International is currently generating about 0.04 per unit of risk. If you would invest 19,943 in Vanguard Small Cap Value on September 3, 2024 and sell it today you would earn a total of 1,677 from holding Vanguard Small Cap Value or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. SPDR SP International
Performance |
| Timeline |
| Vanguard Small Cap |
| SPDR SP International |
Vanguard Small and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and SPDR SP
The main advantage of trading using opposite Vanguard Small and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Small Cap Growth | Vanguard Small vs. Vanguard Value Index | Vanguard Small vs. Vanguard Small Cap Index |
| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. JPMorgan Fundamental Data |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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