Correlation Between Vanguard Intermediate and SSGA Active
Can any of the company-specific risk be diversified away by investing in both Vanguard Intermediate and SSGA Active 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 SSGA Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Intermediate Term Tax Exempt and SSGA Active Trust, you can compare the effects of market volatilities on Vanguard Intermediate and SSGA Active 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 SSGA Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Intermediate and SSGA Active.
Diversification Opportunities for Vanguard Intermediate and SSGA Active
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and SSGA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Tax and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust 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 Tax Exempt are associated (or correlated) with SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and SSGA Active go up and down completely randomly.
Pair Corralation between Vanguard Intermediate and SSGA Active
Given the investment horizon of 90 days Vanguard Intermediate is expected to generate 1.68 times less return on investment than SSGA Active. But when comparing it to its historical volatility, Vanguard Intermediate Term Tax Exempt is 1.1 times less risky than SSGA Active. It trades about 0.05 of its potential returns per unit of risk. SSGA Active Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,821 in SSGA Active Trust on August 26, 2024 and sell it today you would earn a total of 156.00 from holding SSGA Active Trust or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 53.05% |
| Values | Daily Returns |
Vanguard Intermediate Term Tax vs. SSGA Active Trust
Performance |
| Timeline |
| Vanguard Intermediate |
| SSGA Active Trust |
Vanguard Intermediate and SSGA Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Intermediate and SSGA Active
The main advantage of trading using opposite Vanguard Intermediate and SSGA Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Intermediate position performs unexpectedly, SSGA Active 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 SSGA Active will offset losses from the drop in SSGA Active's long position.| Vanguard Intermediate vs. SSGA Active Trust | Vanguard Intermediate vs. SPDR Nuveen Municipal | Vanguard Intermediate vs. Xtrackers California Municipal | Vanguard Intermediate vs. iShares Short Maturity |
| SSGA Active vs. BlackRock Intermediate Muni | SSGA Active vs. SSGA Active Trust | SSGA Active vs. SPDR MarketAxess Investment | SSGA Active vs. SSGA Active Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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