Correlation Between Vanguard Mid and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid 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 Mid 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 Mid Cap Index and SPDR SP MIDCAP, you can compare the effects of market volatilities on Vanguard Mid 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 Mid with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and SPDR SP.
Diversification Opportunities for Vanguard Mid and SPDR SP
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and SPDR SP MIDCAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP MIDCAP and Vanguard Mid 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 Mid Cap Index 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 MIDCAP has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and SPDR SP go up and down completely randomly.
Pair Corralation between Vanguard Mid and SPDR SP
Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to generate 0.74 times more return on investment than SPDR SP. However, Vanguard Mid Cap Index is 1.35 times less risky than SPDR SP. It trades about 0.15 of its potential returns per unit of risk. SPDR SP MIDCAP is currently generating about 0.09 per unit of risk. If you would invest 24,181 in Vanguard Mid Cap Index on August 24, 2024 and sell it today you would earn a total of 3,747 from holding Vanguard Mid Cap Index or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. SPDR SP MIDCAP
Performance |
| Timeline |
| Vanguard Mid Cap |
| SPDR SP MIDCAP |
Vanguard Mid and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and SPDR SP
The main advantage of trading using opposite Vanguard Mid and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid 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 Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
| SPDR SP vs. iShares Core SP | SPDR SP vs. iShares Russell 2000 | SPDR SP vs. iShares MSCI EAFE | SPDR SP vs. iShares Russell 2000 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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