Correlation Between SPDR Bloomberg and Vanguard Mortgage

Can any of the company-specific risk be diversified away by investing in both SPDR Bloomberg and Vanguard Mortgage 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 Bloomberg and Vanguard Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR Bloomberg Barclays and Vanguard Mortgage Backed Securities, you can compare the effects of market volatilities on SPDR Bloomberg and Vanguard Mortgage 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 Bloomberg with a short position of Vanguard Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and Vanguard Mortgage.

Diversification Opportunities for SPDR Bloomberg and Vanguard Mortgage

0.19

Correlation Coefficient

SPDR Bloomberg  Vanguard Mortgage

Average diversification

The 3 months correlation between SPDR and Vanguard is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Barclays and Vanguard Mortgage Backed Secur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mortgage and SPDR Bloomberg 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 Bloomberg Barclays are associated (or correlated) with Vanguard Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mortgage has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and Vanguard Mortgage go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and Vanguard Mortgage

Considering the 90-day investment horizon SPDR Bloomberg Barclays is expected to generate 391.42 times more return on investment than Vanguard Mortgage. However, SPDR Bloomberg is 391.42 times more volatile than Vanguard Mortgage Backed Securities. It trades about 0.13 of its potential returns per unit of risk. Vanguard Mortgage Backed Securities is currently generating about 0.14 per unit of risk. If you would invest  2,773  in SPDR Bloomberg Barclays on December 28, 2024 and sell it today you would earn a total of  99,827  from holding SPDR Bloomberg Barclays or generate 3599.96% return on investment over 90 days.

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

SPDR Bloomberg Barclays  vs.  Vanguard Mortgage Backed Secur

SPDR Bloomberg Barclays

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Barclays are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, SPDR Bloomberg exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Mortgage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mortgage Backed Securities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Vanguard Mortgage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR Bloomberg and Vanguard Mortgage

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

The idea behind SPDR Bloomberg Barclays and Vanguard Mortgage Backed Securities 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.