Correlation Between Vanguard Target and State Street
Can any of the company-specific risk be diversified away by investing in both Vanguard Target 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 Target 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 Target Retirement and State Street Target, you can compare the effects of market volatilities on Vanguard Target 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 Target with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Target and State Street.
Diversification Opportunities for Vanguard Target and State Street
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and State is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Target Retirement and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target and Vanguard Target 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 Target Retirement 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 Target has no effect on the direction of Vanguard Target i.e., Vanguard Target and State Street go up and down completely randomly.
Pair Corralation between Vanguard Target and State Street
Assuming the 90 days horizon Vanguard Target is expected to generate 1.02 times less return on investment than State Street. But when comparing it to its historical volatility, Vanguard Target Retirement is 1.11 times less risky than State Street. It trades about 0.14 of its potential returns per unit of risk. State Street Target is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,203 in State Street Target on September 1, 2024 and sell it today you would earn a total of 295.00 from holding State Street Target or generate 24.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Vanguard Target Retirement vs. State Street Target
Performance |
| Timeline |
| Vanguard Target Reti |
| State Street Target |
Vanguard Target and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Target and State Street
The main advantage of trading using opposite Vanguard Target and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Target 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 Target vs. Vanguard Materials Index | Vanguard Target vs. Vanguard Limited Term Tax Exempt | Vanguard Target vs. Vanguard Limited Term Tax Exempt | Vanguard Target vs. Vanguard Global Minimum |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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