Correlation Between Vanguard Total and State Street
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and State Street 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 State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total International and State Street Hedged, you can compare the effects of market volatilities on Vanguard Total and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and State Street.
Diversification Opportunities for Vanguard Total and State Street
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and State is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and State Street Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Hedged 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 International are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Hedged has no effect on the direction of Vanguard Total i.e., Vanguard Total and State Street go up and down completely randomly.
Pair Corralation between Vanguard Total and State Street
Assuming the 90 days horizon Vanguard Total is expected to generate 1.1 times less return on investment than State Street. In addition to that, Vanguard Total is 1.11 times more volatile than State Street Hedged. It trades about 0.08 of its total potential returns per unit of risk. State Street Hedged is currently generating about 0.1 per unit of volatility. If you would invest 10,314 in State Street Hedged on September 1, 2024 and sell it today you would earn a total of 2,081 from holding State Street Hedged or generate 20.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Vanguard Total International vs. State Street Hedged
Performance |
| Timeline |
| Vanguard Total Inter |
| State Street Hedged |
Vanguard Total and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and State Street
The main advantage of trading using opposite Vanguard Total and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard Extended Market | Vanguard Total vs. Vanguard Small Cap Index | Vanguard Total vs. Vanguard Mid Cap Index |
| State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Target |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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