Correlation Between Vanguard Growth and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and SPDR Portfolio 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 Growth and SPDR Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Growth Index and SPDR Portfolio SP, you can compare the effects of market volatilities on Vanguard Growth and SPDR Portfolio 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 Growth with a short position of SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and SPDR Portfolio.
Diversification Opportunities for Vanguard Growth and SPDR Portfolio
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and SPDR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP and Vanguard Growth 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 Growth Index are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Vanguard Growth and SPDR Portfolio
Considering the 90-day investment horizon Vanguard Growth is expected to generate 2.6 times less return on investment than SPDR Portfolio. But when comparing it to its historical volatility, Vanguard Growth Index is 1.45 times less risky than SPDR Portfolio. It trades about 0.12 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,524 in SPDR Portfolio SP on August 27, 2024 and sell it today you would earn a total of 337.00 from holding SPDR Portfolio SP or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. SPDR Portfolio SP
Performance |
| Timeline |
| Vanguard Growth Index |
| SPDR Portfolio SP |
Vanguard Growth and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and SPDR Portfolio
The main advantage of trading using opposite Vanguard Growth and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| SPDR Portfolio vs. SPDR Russell Small | SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Portfolio Emerging | SPDR Portfolio vs. SPDR Portfolio SP |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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