Correlation Between SPDR Series and Vanguard Specialized
Can any of the company-specific risk be diversified away by investing in both SPDR Series and Vanguard Specialized 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 Series and Vanguard Specialized into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Series Trust and Vanguard Specialized Funds, you can compare the effects of market volatilities on SPDR Series and Vanguard Specialized 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 Series with a short position of Vanguard Specialized. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Series and Vanguard Specialized.
Diversification Opportunities for SPDR Series and Vanguard Specialized
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPDR and Vanguard is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Series Trust and Vanguard Specialized Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Specialized and SPDR Series 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 Series Trust are associated (or correlated) with Vanguard Specialized. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Specialized has no effect on the direction of SPDR Series i.e., SPDR Series and Vanguard Specialized go up and down completely randomly.
Pair Corralation between SPDR Series and Vanguard Specialized
Assuming the 90 days trading horizon SPDR Series Trust is expected to generate 1.0 times more return on investment than Vanguard Specialized. However, SPDR Series Trust is 1.0 times less risky than Vanguard Specialized. It trades about 0.22 of its potential returns per unit of risk. Vanguard Specialized Funds is currently generating about -0.4 per unit of risk. If you would invest 494,891 in SPDR Series Trust on September 26, 2024 and sell it today you would earn a total of 26,734 from holding SPDR Series Trust or generate 5.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR Series Trust vs. Vanguard Specialized Funds
Performance |
Timeline |
SPDR Series Trust |
Vanguard Specialized |
SPDR Series and Vanguard Specialized Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Series and Vanguard Specialized
The main advantage of trading using opposite SPDR Series and Vanguard Specialized positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Series position performs unexpectedly, Vanguard Specialized 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 Specialized will offset losses from the drop in Vanguard Specialized's long position.SPDR Series vs. Vanguard Index Funds | SPDR Series vs. Vanguard STAR Funds | SPDR Series vs. SPDR SP 500 | SPDR Series vs. iShares Trust |
Vanguard Specialized vs. iShares Core SP | Vanguard Specialized vs. Vanguard World | Vanguard Specialized vs. The Select Sector | Vanguard Specialized vs. SPDR Series Trust |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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