Correlation Between Vanguard Information and SPDR FactSet

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

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

Diversification Opportunities for Vanguard Information and SPDR FactSet

0.9

Correlation Coefficient

Vanguard Information  SPDR FactSet

Almost no diversification

The 3 months correlation between Vanguard and SPDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative and Vanguard Information 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 Information Technology are associated (or correlated) with SPDR FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of Vanguard Information i.e., Vanguard Information and SPDR FactSet go up and down completely randomly.

Pair Corralation between Vanguard Information and SPDR FactSet

Considering the 90-day investment horizon Vanguard Information Technology is expected to under-perform the SPDR FactSet. In addition to that, Vanguard Information is 1.03 times more volatile than SPDR FactSet Innovative. It trades about -0.12 of its total potential returns per unit of risk. SPDR FactSet Innovative is currently generating about -0.06 per unit of volatility. If you would invest  17,459  in SPDR FactSet Innovative on December 28, 2024 and sell it today you would lose (1,263) from holding SPDR FactSet Innovative or give up 7.23% of portfolio value over 90 days.

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

Vanguard Information Technolog  vs.  SPDR FactSet Innovative

Vanguard Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

SPDR FactSet Innovative

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR FactSet Innovative has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Vanguard Information and SPDR FactSet

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

The idea behind Vanguard Information Technology and SPDR FactSet Innovative 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.