Correlation Between Vanguard Growth and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and SPDR SP 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 SP 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 SP 500, you can compare the effects of market volatilities on Vanguard Growth and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and SPDR SP.
Diversification Opportunities for Vanguard Growth and SPDR SP
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and SPDR SP go up and down completely randomly.
Pair Corralation between Vanguard Growth and SPDR SP
Considering the 90-day investment horizon Vanguard Growth is expected to generate 1.2 times less return on investment than SPDR SP. In addition to that, Vanguard Growth is 1.31 times more volatile than SPDR SP 500. It trades about 0.1 of its total potential returns per unit of risk. SPDR SP 500 is currently generating about 0.15 per unit of volatility. If you would invest 58,177 in SPDR SP 500 on August 30, 2024 and sell it today you would earn a total of 1,706 from holding SPDR SP 500 or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. SPDR SP 500
Performance |
| Timeline |
| Vanguard Growth Index |
| SPDR SP 500 |
Vanguard Growth and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and SPDR SP
The main advantage of trading using opposite Vanguard Growth and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP'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 SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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