Correlation Between Vanguard Bond and SPDR Series
Can any of the company-specific risk be diversified away by investing in both Vanguard Bond 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 Bond 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 Bond Index and SPDR Series Trust, you can compare the effects of market volatilities on Vanguard Bond 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 Bond with a short position of SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Bond and SPDR Series.
Diversification Opportunities for Vanguard Bond and SPDR Series
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vanguard and SPDR is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Bond Index 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 Bond 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 Bond Index 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 Bond i.e., Vanguard Bond and SPDR Series go up and down completely randomly.
Pair Corralation between Vanguard Bond and SPDR Series
Assuming the 90 days trading horizon Vanguard Bond Index is expected to generate 1.31 times more return on investment than SPDR Series. However, Vanguard Bond is 1.31 times more volatile than SPDR Series Trust. It trades about 0.02 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 139,400 in Vanguard Bond Index on October 3, 2024 and sell it today you would earn a total of 12,100 from holding Vanguard Bond Index or generate 8.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 80.36% |
Values | Daily Returns |
Vanguard Bond Index vs. SPDR Series Trust
Performance |
Timeline |
Vanguard Bond Index |
SPDR Series Trust |
Vanguard Bond and SPDR Series Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Bond and SPDR Series
The main advantage of trading using opposite Vanguard Bond and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Bond 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 Bond vs. Vanguard Funds Public | Vanguard Bond vs. Vanguard Specialized Funds | Vanguard Bond vs. Vanguard World | Vanguard Bond vs. Vanguard Index Funds |
SPDR Series vs. Vanguard Index Funds | SPDR Series vs. Vanguard STAR Funds | SPDR Series vs. Vanguard Bond Index | SPDR Series vs. Invesco QQQ Trust |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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