Correlation Between Vanguard FTSE and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 FTSE 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 FTSE Developed and SSgA SPDR ETFs, you can compare the effects of market volatilities on Vanguard FTSE 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 FTSE with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and SSgA SPDR.
Diversification Opportunities for Vanguard FTSE and SSgA SPDR
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and SSgA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed 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 FTSE 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 FTSE Developed 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 FTSE i.e., Vanguard FTSE and SSgA SPDR go up and down completely randomly.
Pair Corralation between Vanguard FTSE and SSgA SPDR
Assuming the 90 days trading horizon Vanguard FTSE is expected to generate 1.2 times less return on investment than SSgA SPDR. In addition to that, Vanguard FTSE is 1.17 times more volatile than SSgA SPDR ETFs. It trades about 0.05 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.07 per unit of volatility. If you would invest 3,109 in SSgA SPDR ETFs on September 3, 2024 and sell it today you would earn a total of 380.00 from holding SSgA SPDR ETFs or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. SSgA SPDR ETFs
Performance |
| Timeline |
| Vanguard FTSE Developed |
| SSgA SPDR ETFs |
Vanguard FTSE and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and SSgA SPDR
The main advantage of trading using opposite Vanguard FTSE and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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 FTSE vs. Vanguard USD Corporate | Vanguard FTSE vs. Vanguard Global Aggregate | Vanguard FTSE vs. Vanguard USD Corporate | Vanguard FTSE vs. Vanguard FTSE All World |
| SSgA SPDR vs. Leverage Shares 3x | SSgA SPDR vs. WisdomTree Natural Gas | SSgA SPDR vs. Leverage Shares 3x | SSgA SPDR vs. GraniteShares 3x Short |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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