Correlation Between Vanguard Dividend and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Vanguard Dividend 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 Dividend 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 Dividend Appreciation and SPDR SP 500, you can compare the effects of market volatilities on Vanguard Dividend 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 Dividend with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Dividend and SPDR SP.
Diversification Opportunities for Vanguard Dividend and SPDR SP
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 and Vanguard Dividend 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 Dividend Appreciation 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 500 has no effect on the direction of Vanguard Dividend i.e., Vanguard Dividend and SPDR SP go up and down completely randomly.
Pair Corralation between Vanguard Dividend and SPDR SP
Considering the 90-day investment horizon Vanguard Dividend is expected to generate 1.01 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Vanguard Dividend Appreciation is 1.08 times less risky than SPDR SP. It trades about 0.16 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 57,904 in SPDR SP 500 on August 26, 2024 and sell it today you would earn a total of 1,647 from holding SPDR SP 500 or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Dividend Appreciation vs. SPDR SP 500
Performance |
| Timeline |
| Vanguard Dividend |
| SPDR SP 500 |
Vanguard Dividend and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Dividend and SPDR SP
The main advantage of trading using opposite Vanguard Dividend and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Dividend 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 Dividend vs. Vanguard High Dividend | Vanguard Dividend vs. Vanguard Real Estate | Vanguard Dividend vs. Schwab Dividend Equity | Vanguard Dividend vs. Vanguard Growth Index |
| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |