Correlation Between Vanguard STAR and SPDR Series
Can any of the company-specific risk be diversified away by investing in both Vanguard STAR and SPDR Series 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 STAR and SPDR Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard STAR Funds and SPDR Series Trust, you can compare the effects of market volatilities on Vanguard STAR and SPDR Series 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 STAR with a short position of SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard STAR and SPDR Series.
Diversification Opportunities for Vanguard STAR and SPDR Series
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and SPDR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard STAR Funds and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust and Vanguard STAR 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 STAR Funds are associated (or correlated) with SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of Vanguard STAR i.e., Vanguard STAR and SPDR Series go up and down completely randomly.
Pair Corralation between Vanguard STAR and SPDR Series
Assuming the 90 days trading horizon Vanguard STAR Funds is expected to generate 0.73 times more return on investment than SPDR Series. However, Vanguard STAR Funds is 1.38 times less risky than SPDR Series. It trades about 0.05 of its potential returns per unit of risk. SPDR Series Trust is currently generating about 0.03 per unit of risk. If you would invest 98,769 in Vanguard STAR Funds on September 3, 2024 and sell it today you would earn a total of 25,271 from holding Vanguard STAR Funds or generate 25.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard STAR Funds vs. SPDR Series Trust
Performance |
| Timeline |
| Vanguard STAR Funds |
| SPDR Series Trust |
Vanguard STAR and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard STAR and SPDR Series
The main advantage of trading using opposite Vanguard STAR and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard STAR position performs unexpectedly, SPDR Series 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 Series will offset losses from the drop in SPDR Series' long position.| Vanguard STAR vs. Vanguard Index Funds | Vanguard STAR vs. Vanguard Index Funds | Vanguard STAR vs. SPDR SP 500 | Vanguard STAR vs. iShares Trust |
| SPDR Series vs. Vanguard Index Funds | SPDR Series vs. Vanguard Index Funds | SPDR Series vs. Vanguard STAR Funds | SPDR Series vs. SPDR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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