Correlation Between Vanguard FTSE and SPDR Bloomberg

Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and SPDR Bloomberg 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 SPDR Bloomberg 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 SPDR Bloomberg 1 3, you can compare the effects of market volatilities on Vanguard FTSE and SPDR Bloomberg 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 SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and SPDR Bloomberg.

Diversification Opportunities for Vanguard FTSE and SPDR Bloomberg

0.89

Correlation Coefficient

Vanguard FTSE  SPDR Bloomberg

Very poor diversification

The 3 months correlation between Vanguard and SPDR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and SPDR Bloomberg 1 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg 1 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 SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg 1 has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between Vanguard FTSE and SPDR Bloomberg

Considering the 90-day investment horizon Vanguard FTSE Developed is expected to generate 13.14 times more return on investment than SPDR Bloomberg. However, Vanguard FTSE is 13.14 times more volatile than SPDR Bloomberg 1 3. It trades about 0.16 of its potential returns per unit of risk. SPDR Bloomberg 1 3 is currently generating about 0.36 per unit of risk. If you would invest  4,177  in Vanguard FTSE Developed on January 17, 2024 and sell it today you would earn a total of  659.00  from holding Vanguard FTSE Developed or generate 15.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Vanguard FTSE Developed  vs.  SPDR Bloomberg 1 3

Vanguard FTSE Developed

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SPDR Bloomberg 1

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg 1 3 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, SPDR Bloomberg is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vanguard FTSE and SPDR Bloomberg

The main advantage of trading using opposite Vanguard FTSE and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, SPDR Bloomberg 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 Bloomberg will offset losses from the drop in SPDR Bloomberg's long position.

The idea behind Vanguard FTSE Developed and SPDR Bloomberg 1 3 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.