Correlation Between SPDR Portfolio and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Vanguard Total 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 SPDR Portfolio and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and Vanguard Total Stock, you can compare the effects of market volatilities on SPDR Portfolio and Vanguard Total 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 SPDR Portfolio with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Vanguard Total.
Diversification Opportunities for SPDR Portfolio and Vanguard Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and SPDR Portfolio 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 SPDR Portfolio SP are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Vanguard Total go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Vanguard Total
Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 0.97 times more return on investment than Vanguard Total. However, SPDR Portfolio SP is 1.03 times less risky than Vanguard Total. It trades about 0.04 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.04 per unit of risk. If you would invest 4,978 in SPDR Portfolio SP on January 17, 2024 and sell it today you would earn a total of 1,199 from holding SPDR Portfolio SP or generate 24.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
SPDR Portfolio SP vs. Vanguard Total Stock
Performance |
| Timeline |
| SPDR Portfolio SP |
| Vanguard Total Stock |
SPDR Portfolio and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Vanguard Total
The main advantage of trading using opposite SPDR Portfolio and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| SPDR Portfolio vs. Natixis ETF Trust | SPDR Portfolio vs. HUMANA INC | SPDR Portfolio vs. Sparta Capital | SPDR Portfolio vs. T Rowe Price |
| Vanguard Total vs. Natixis ETF Trust | Vanguard Total vs. HUMANA INC | Vanguard Total vs. Sparta Capital | Vanguard Total vs. T Rowe Price |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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