Correlation Between Vanguard Dividend and SPDR SP

Can any of the company-specific risk be diversified away by investing in both Vanguard Dividend 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 Dividend 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 Dividend Appreciation and SPDR SP Dividend, you can compare the effects of market volatilities on Vanguard Dividend 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 Dividend with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Dividend and SPDR SP.

Diversification Opportunities for Vanguard Dividend and SPDR SP

0.97

Correlation Coefficient

Vanguard Dividend  SPDR SP

Almost no diversification

The 3 months correlation between Vanguard and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend and Vanguard Dividend 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 Dividend Appreciation 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 Dividend has no effect on the direction of Vanguard Dividend i.e., Vanguard Dividend and SPDR SP go up and down completely randomly.

Pair Corralation between Vanguard Dividend and SPDR SP

Considering the 90-day investment horizon Vanguard Dividend Appreciation is expected to generate 0.93 times more return on investment than SPDR SP. However, Vanguard Dividend Appreciation is 1.08 times less risky than SPDR SP. It trades about 0.15 of its potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.1 per unit of risk. If you would invest  19,161  in Vanguard Dividend Appreciation on May 4, 2025 and sell it today you would earn a total of  1,248  from holding Vanguard Dividend Appreciation or generate 6.51% return on investment over 90 days.

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

Vanguard Dividend Appreciation  vs.  SPDR SP Dividend

Vanguard Dividend

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Dividend Appreciation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Vanguard Dividend may actually be approaching a critical reversion point that can send shares even higher in September 2025.

SPDR SP Dividend

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Dividend are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SPDR SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Dividend and SPDR SP

The main advantage of trading using opposite Vanguard Dividend and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Dividend 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 Dividend Appreciation and SPDR SP Dividend 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.