Correlation Between SSgA SPDR and Vanguard Funds
Can any of the company-specific risk be diversified away by investing in both SSgA SPDR and Vanguard Funds 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 SSgA SPDR and Vanguard Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSgA SPDR ETFs and Vanguard Funds PLC, you can compare the effects of market volatilities on SSgA SPDR and Vanguard Funds 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 SSgA SPDR with a short position of Vanguard Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSgA SPDR and Vanguard Funds.
Diversification Opportunities for SSgA SPDR and Vanguard Funds
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SSgA and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SSgA SPDR ETFs and Vanguard Funds PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds PLC and SSgA SPDR 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 SSgA SPDR ETFs are associated (or correlated) with Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds PLC has no effect on the direction of SSgA SPDR i.e., SSgA SPDR and Vanguard Funds go up and down completely randomly.
Pair Corralation between SSgA SPDR and Vanguard Funds
Assuming the 90 days trading horizon SSgA SPDR is expected to generate 3.82 times less return on investment than Vanguard Funds. But when comparing it to its historical volatility, SSgA SPDR ETFs is 4.94 times less risky than Vanguard Funds. It trades about 0.2 of its potential returns per unit of risk. Vanguard Funds PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,440 in Vanguard Funds PLC on September 25, 2024 and sell it today you would earn a total of 217.00 from holding Vanguard Funds PLC or generate 6.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.46% |
Values | Daily Returns |
SSgA SPDR ETFs vs. Vanguard Funds PLC
Performance |
Timeline |
SSgA SPDR ETFs |
Vanguard Funds PLC |
SSgA SPDR and Vanguard Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SSgA SPDR and Vanguard Funds
The main advantage of trading using opposite SSgA SPDR and Vanguard Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSgA SPDR position performs unexpectedly, Vanguard Funds 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 Funds will offset losses from the drop in Vanguard Funds' long position.SSgA SPDR vs. UBS Fund Solutions | SSgA SPDR vs. Xtrackers II | SSgA SPDR vs. Xtrackers Nikkei 225 | SSgA SPDR vs. iShares VII PLC |
Vanguard Funds vs. UBS Fund Solutions | Vanguard Funds vs. Xtrackers II | Vanguard Funds vs. Xtrackers Nikkei 225 | Vanguard Funds vs. iShares VII PLC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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