Correlation Between Vanguard and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Vanguard and SSgA SPDR 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 and SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and SSgA SPDR ETFs, you can compare the effects of market volatilities on Vanguard and SSgA SPDR 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 with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and SSgA SPDR.
Diversification Opportunities for Vanguard and SSgA SPDR
Poor diversification
The 3 months correlation between Vanguard and SSgA is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Vanguard 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 SP 500 are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Vanguard i.e., Vanguard and SSgA SPDR go up and down completely randomly.
Pair Corralation between Vanguard and SSgA SPDR
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 0.78 times more return on investment than SSgA SPDR. However, Vanguard SP 500 is 1.29 times less risky than SSgA SPDR. It trades about 0.13 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.04 per unit of risk. If you would invest 6,662 in Vanguard SP 500 on September 14, 2024 and sell it today you would earn a total of 4,309 from holding Vanguard SP 500 or generate 64.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. SSgA SPDR ETFs
Performance |
| Timeline |
| Vanguard SP 500 |
| SSgA SPDR ETFs |
Vanguard and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and SSgA SPDR
The main advantage of trading using opposite Vanguard and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| Vanguard vs. SPDR Dow Jones | Vanguard vs. iShares Core MSCI | Vanguard vs. iShares SP 500 | Vanguard vs. iShares Core MSCI |
| SSgA SPDR vs. SPDR Dow Jones | SSgA SPDR vs. iShares Core MSCI | SSgA SPDR vs. iShares SP 500 | SSgA SPDR vs. iShares Core MSCI |
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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