Correlation Between Vanguard Mid and SPDR SP

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

By analyzing existing cross correlation between Vanguard Mid Cap Value and SPDR SP 600, you can compare the effects of market volatilities on Vanguard Mid and SPDR SP 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 Mid with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and SPDR SP.

Diversification Opportunities for Vanguard Mid and SPDR SP

0.93

Correlation Coefficient

Vanguard Mid  SPDR SP

Almost no diversification

The 3 months correlation between Vanguard and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Value and SPDR SP 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 600 and Vanguard Mid 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 Mid Cap Value are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 600 has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and SPDR SP go up and down completely randomly.

Pair Corralation between Vanguard Mid and SPDR SP

Considering the 90-day investment horizon Vanguard Mid Cap Value is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Mid Cap Value is 1.61 times less risky than SPDR SP. The etf trades about -0.13 of its potential returns per unit of risk. The SPDR SP 600 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,508  in SPDR SP 600 on September 17, 2024 and sell it today you would earn a total of  176.00  from holding SPDR SP 600 or generate 1.85% return on investment over 90 days.

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

Vanguard Mid Cap Value  vs.  SPDR SP 600

Vanguard Mid Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Value are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Vanguard Mid is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR SP 600

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 600 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPDR SP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard Mid and SPDR SP

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

The idea behind Vanguard Mid Cap Value and SPDR SP 600 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.