Correlation Between SP 500 and Vanguard USD

Can any of the company-specific risk be diversified away by investing in both SP 500 and Vanguard USD 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 SP 500 and Vanguard USD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SP 500 VIX and Vanguard USD Treasury, you can compare the effects of market volatilities on SP 500 and Vanguard USD 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 SP 500 with a short position of Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and Vanguard USD.

Diversification Opportunities for SP 500 and Vanguard USD

0.0

Correlation Coefficient

SP 500  Vanguard USD

Pay attention - limited upside

The 3 months correlation between VILX and Vanguard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX and Vanguard USD Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Treasury and SP 500 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 SP 500 VIX are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Treasury has no effect on the direction of SP 500 i.e., SP 500 and Vanguard USD go up and down completely randomly.

Pair Corralation between SP 500 and Vanguard USD

If you would invest  1,218  in Vanguard USD Treasury on October 22, 2024 and sell it today you would earn a total of  871.00  from holding Vanguard USD Treasury or generate 71.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SP 500 VIX  vs.  Vanguard USD Treasury

SP 500 VIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP 500 VIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SP 500 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Vanguard USD Treasury

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard USD Treasury are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vanguard USD unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SP 500 and Vanguard USD

The main advantage of trading using opposite SP 500 and Vanguard USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 position performs unexpectedly, Vanguard USD 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 USD will offset losses from the drop in Vanguard USD's long position.

The idea behind SP 500 VIX and Vanguard USD Treasury 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.