Correlation Between Vanguard Funds and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Vanguard Funds 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 Funds 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 Funds Public and SSgA SPDR ETFs, you can compare the effects of market volatilities on Vanguard Funds 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 Funds with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Funds and SSgA SPDR.
Diversification Opportunities for Vanguard Funds and SSgA SPDR
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and SSgA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public 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 Funds 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 Funds Public 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 Funds i.e., Vanguard Funds and SSgA SPDR go up and down completely randomly.
Pair Corralation between Vanguard Funds and SSgA SPDR
Assuming the 90 days trading horizon Vanguard Funds Public is expected to generate 2.14 times more return on investment than SSgA SPDR. However, Vanguard Funds is 2.14 times more volatile than SSgA SPDR ETFs. 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 7,936 in Vanguard Funds Public on September 3, 2024 and sell it today you would earn a total of 2,904 from holding Vanguard Funds Public or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Funds Public vs. SSgA SPDR ETFs
Performance |
| Timeline |
| Vanguard Funds Public |
| SSgA SPDR ETFs |
Vanguard Funds and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Funds and SSgA SPDR
The main advantage of trading using opposite Vanguard Funds and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Funds 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 Funds vs. Vanguard ESG Developed | Vanguard Funds vs. Vanguard Funds Public | Vanguard Funds vs. Vanguard Funds Public | Vanguard Funds vs. Vanguard FTSE Developed |
| SSgA SPDR vs. UBS Fund Solutions | SSgA SPDR vs. Xtrackers II | SSgA SPDR vs. Xtrackers Nikkei 225 | SSgA SPDR vs. iShares VII PLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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