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 MSCI and Vanguard Total World, 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 MSCI and Vanguard Total World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total World 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 MSCI 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 World 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 is expected to generate 1.07 times less return on investment than Vanguard Total. In addition to that, SPDR Portfolio is 1.0 times more volatile than Vanguard Total World. It trades about 0.07 of its total potential returns per unit of risk. Vanguard Total World is currently generating about 0.08 per unit of volatility. If you would invest 10,230 in Vanguard Total World on January 20, 2024 and sell it today you would earn a total of 313.00 from holding Vanguard Total World or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio MSCI vs. Vanguard Total World
Performance |
| Timeline |
| SPDR Portfolio MSCI |
| Vanguard Total World |
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. SPDR Portfolio Europe | SPDR Portfolio vs. SPDR Portfolio Corporate | SPDR Portfolio vs. SPDR Portfolio Intermediate | SPDR Portfolio vs. SPDR MSCI EAFE |
| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard FTSE Emerging |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |