Correlation Between Vanguard and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 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 SP 500 and SPDR SP Dividend, you can compare the effects of market volatilities on Vanguard 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 with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and SPDR SP.
Diversification Opportunities for Vanguard and SPDR SP
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend 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 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 Dividend has no effect on the direction of Vanguard i.e., Vanguard and SPDR SP go up and down completely randomly.
Pair Corralation between Vanguard and SPDR SP
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 1.22 times more return on investment than SPDR SP. However, Vanguard is 1.22 times more volatile than SPDR SP Dividend. It trades about 0.25 of its potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.23 per unit of risk. If you would invest 10,216 in Vanguard SP 500 on August 28, 2024 and sell it today you would earn a total of 672.00 from holding Vanguard SP 500 or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. SPDR SP Dividend
Performance |
| Timeline |
| Vanguard SP 500 |
| SPDR SP Dividend |
Vanguard and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and SPDR SP
The main advantage of trading using opposite Vanguard and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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 vs. Vanguard FTSE All World | Vanguard vs. iShares Core MSCI | Vanguard vs. Vanguard FTSE All World | Vanguard vs. Vanguard FTSE Emerging |
| SPDR SP vs. Vanguard SP 500 | SPDR SP vs. SPDR Dow Jones | SPDR SP vs. iShares Core MSCI | SPDR SP vs. iShares SP 500 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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