Correlation Between Vanguard Total and SPDR FTSE
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and SPDR FTSE 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 Total and SPDR FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and SPDR FTSE International, you can compare the effects of market volatilities on Vanguard Total and SPDR FTSE 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 Total with a short position of SPDR FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and SPDR FTSE.
Diversification Opportunities for Vanguard Total and SPDR FTSE
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and SPDR is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and SPDR FTSE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FTSE International and Vanguard Total 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 Total Stock are associated (or correlated) with SPDR FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FTSE International has no effect on the direction of Vanguard Total i.e., Vanguard Total and SPDR FTSE go up and down completely randomly.
Pair Corralation between Vanguard Total and SPDR FTSE
Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 1.46 times more return on investment than SPDR FTSE. However, Vanguard Total is 1.46 times more volatile than SPDR FTSE International. It trades about 0.14 of its potential returns per unit of risk. SPDR FTSE International is currently generating about -0.01 per unit of risk. If you would invest 25,674 in Vanguard Total Stock on August 28, 2024 and sell it today you would earn a total of 4,122 from holding Vanguard Total Stock or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. SPDR FTSE International
Performance |
| Timeline |
| Vanguard Total Stock |
| SPDR FTSE International |
Vanguard Total and SPDR FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and SPDR FTSE
The main advantage of trading using opposite Vanguard Total and SPDR FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, SPDR FTSE 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 FTSE will offset losses from the drop in SPDR FTSE's long position.| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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