Correlation Between Vanguard Large and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Vanguard Large and SPDR SSGA 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 Large and SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Large Cap Index and SPDR SSGA Large, you can compare the effects of market volatilities on Vanguard Large and SPDR SSGA 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 Large with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and SPDR SSGA.
Diversification Opportunities for Vanguard Large and SPDR SSGA
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Large Cap Index and SPDR SSGA Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Large and Vanguard Large 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 Large Cap Index are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Large has no effect on the direction of Vanguard Large i.e., Vanguard Large and SPDR SSGA go up and down completely randomly.
Pair Corralation between Vanguard Large and SPDR SSGA
Allowing for the 90-day total investment horizon Vanguard Large is expected to generate 1.07 times less return on investment than SPDR SSGA. In addition to that, Vanguard Large is 1.33 times more volatile than SPDR SSGA Large. It trades about 0.2 of its total potential returns per unit of risk. SPDR SSGA Large is currently generating about 0.28 per unit of volatility. If you would invest 17,003 in SPDR SSGA Large on August 29, 2024 and sell it today you would earn a total of 694.00 from holding SPDR SSGA Large or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Large Cap Index vs. SPDR SSGA Large
Performance |
| Timeline |
| Vanguard Large Cap |
| SPDR SSGA Large |
Vanguard Large and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Large and SPDR SSGA
The main advantage of trading using opposite Vanguard Large and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large position performs unexpectedly, SPDR SSGA 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 SSGA will offset losses from the drop in SPDR SSGA's long position.| Vanguard Large vs. Vanguard Mid Cap Index | Vanguard Large vs. Vanguard Small Cap Index | Vanguard Large vs. Vanguard Extended Market | Vanguard Large vs. Vanguard Small Cap Growth |
| SPDR SSGA vs. SPDR SSGA Small | SPDR SSGA vs. SPDR MSCI USA | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. Invesco SP SmallCap |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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