Correlation Between SPDR SP and Vanguard Scottsdale
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Vanguard Scottsdale 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 SP and Vanguard Scottsdale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and Vanguard Scottsdale Funds, you can compare the effects of market volatilities on SPDR SP and Vanguard Scottsdale 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 SP with a short position of Vanguard Scottsdale. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Vanguard Scottsdale.
Diversification Opportunities for SPDR SP and Vanguard Scottsdale
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPDR and Vanguard is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Vanguard Scottsdale Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Scottsdale Funds and SPDR SP 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 SP 500 are associated (or correlated) with Vanguard Scottsdale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Scottsdale Funds has no effect on the direction of SPDR SP i.e., SPDR SP and Vanguard Scottsdale go up and down completely randomly.
Pair Corralation between SPDR SP and Vanguard Scottsdale
Assuming the 90 days trading horizon SPDR SP 500 is expected to under-perform the Vanguard Scottsdale. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP 500 is 1.34 times less risky than Vanguard Scottsdale. The etf trades about -0.02 of its potential returns per unit of risk. The Vanguard Scottsdale Funds is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 160,615 in Vanguard Scottsdale Funds on December 3, 2024 and sell it today you would lose (66.00) from holding Vanguard Scottsdale Funds or give up 0.04% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
SPDR SP 500 vs. Vanguard Scottsdale Funds
Performance |
Timeline |
SPDR SP 500 |
Vanguard Scottsdale Funds |
SPDR SP and Vanguard Scottsdale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SP and Vanguard Scottsdale
The main advantage of trading using opposite SPDR SP and Vanguard Scottsdale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Vanguard Scottsdale 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 Scottsdale will offset losses from the drop in Vanguard Scottsdale's long position.SPDR SP vs. SPDR Dow Jones | SPDR SP vs. SPDR Gold Trust | SPDR SP vs. SPDR Series Trust | SPDR SP vs. SPDR SP Regional |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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