Correlation Between SPDR DoubleLine and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both SPDR DoubleLine 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 DoubleLine 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 DoubleLine Total and Vanguard Total Bond, you can compare the effects of market volatilities on SPDR DoubleLine 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 DoubleLine with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR DoubleLine and Vanguard Total.
Diversification Opportunities for SPDR DoubleLine and Vanguard Total
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Vanguard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SPDR DoubleLine Total and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond and SPDR DoubleLine 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 DoubleLine Total 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 Bond has no effect on the direction of SPDR DoubleLine i.e., SPDR DoubleLine and Vanguard Total go up and down completely randomly.
Pair Corralation between SPDR DoubleLine and Vanguard Total
Given the investment horizon of 90 days SPDR DoubleLine Total is expected to generate 2.04 times more return on investment than Vanguard Total. However, SPDR DoubleLine is 2.04 times more volatile than Vanguard Total Bond. It trades about -0.09 of its potential returns per unit of risk. Vanguard Total Bond is currently generating about -0.25 per unit of risk. If you would invest 3,974 in SPDR DoubleLine Total on January 26, 2024 and sell it today you would lose (65.00) from holding SPDR DoubleLine Total or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR DoubleLine Total vs. Vanguard Total Bond
Performance |
| Timeline |
| SPDR DoubleLine Total |
| Vanguard Total Bond |
SPDR DoubleLine and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR DoubleLine and Vanguard Total
The main advantage of trading using opposite SPDR DoubleLine and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR DoubleLine 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 DoubleLine vs. Fidelity Corporate Bond | SPDR DoubleLine vs. Fidelity Limited Term | SPDR DoubleLine vs. Fidelity High Yield | SPDR DoubleLine vs. Fidelity High Dividend |
| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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