Correlation Between Vanguard Intermediate and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and SPDR Portfolio 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 Intermediate and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Corporate and SPDR Portfolio Intermediate, you can compare the effects of market volatilities on Vanguard Intermediate and SPDR Portfolio 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 Intermediate with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and SPDR Portfolio.
Diversification Opportunities for Vanguard Intermediate and SPDR Portfolio
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Cor and SPDR Portfolio Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Inter and Vanguard Intermediate 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 Intermediate Term Corporate are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Inter has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and SPDR Portfolio
Given the investment horizon of 90 days Vanguard Intermediate Term Corporate is expected to generate 1.3 times more return on investment than SPDR Portfolio. However, Vanguard Intermediate is 1.3 times more volatile than SPDR Portfolio Intermediate. It trades about 0.05 of its potential returns per unit of risk. SPDR Portfolio Intermediate is currently generating about 0.01 per unit of risk. If you would invest 8,129 in Vanguard Intermediate Term Corporate on August 29, 2024 and sell it today you would earn a total of 30.00 from holding Vanguard Intermediate Term Corporate or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Intermediate Term Cor vs. SPDR Portfolio Intermediate
Performance |
| Timeline |
| Vanguard Intermediate |
| SPDR Portfolio Inter |
Vanguard Intermediate and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate and SPDR Portfolio
The main advantage of trading using opposite Vanguard Intermediate and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.The idea behind Vanguard Intermediate Term Corporate and SPDR Portfolio Intermediate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |