Correlation Between Vanguard Communication and SPDR SSGA

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

By analyzing existing cross correlation between Vanguard Communication Services and SPDR SSGA My2026, you can compare the effects of market volatilities on Vanguard Communication and SPDR SSGA 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 Communication with a short position of SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Communication and SPDR SSGA.

Diversification Opportunities for Vanguard Communication and SPDR SSGA

0.78

Correlation Coefficient

Vanguard Communication  SPDR SSGA

Poor diversification

The 3 months correlation between Vanguard and SPDR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Communication Service and SPDR SSGA My2026 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA My2026 and Vanguard Communication 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 Communication Services are associated (or correlated) with SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA My2026 has no effect on the direction of Vanguard Communication i.e., Vanguard Communication and SPDR SSGA go up and down completely randomly.

Pair Corralation between Vanguard Communication and SPDR SSGA

Considering the 90-day investment horizon Vanguard Communication is expected to generate 13.12 times less return on investment than SPDR SSGA. In addition to that, Vanguard Communication is 22.83 times more volatile than SPDR SSGA My2026. It trades about 0.0 of its total potential returns per unit of risk. SPDR SSGA My2026 is currently generating about 0.48 per unit of volatility. If you would invest  2,489  in SPDR SSGA My2026 on October 23, 2024 and sell it today you would earn a total of  10.00  from holding SPDR SSGA My2026 or generate 0.4% return on investment over 90 days.

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

Vanguard Communication Service  vs.  SPDR SSGA My2026

Vanguard Communication

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Communication Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Vanguard Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SPDR SSGA My2026

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA My2026 are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vanguard Communication and SPDR SSGA

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

The idea behind Vanguard Communication Services and SPDR SSGA My2026 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.