Correlation Between Xtrackers California and VanEck Short
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and VanEck Short 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 Xtrackers California and VanEck Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and VanEck Short Muni, you can compare the effects of market volatilities on Xtrackers California and VanEck Short 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 Xtrackers California with a short position of VanEck Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and VanEck Short.
Diversification Opportunities for Xtrackers California and VanEck Short
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and VanEck is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and VanEck Short Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Short Muni and Xtrackers California 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 Xtrackers California Municipal are associated (or correlated) with VanEck Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Short Muni has no effect on the direction of Xtrackers California i.e., Xtrackers California and VanEck Short go up and down completely randomly.
Pair Corralation between Xtrackers California and VanEck Short
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 2.25 times more return on investment than VanEck Short. However, Xtrackers California is 2.25 times more volatile than VanEck Short Muni. It trades about 0.22 of its potential returns per unit of risk. VanEck Short Muni is currently generating about 0.17 per unit of risk. If you would invest 2,501 in Xtrackers California Municipal on August 28, 2024 and sell it today you would earn a total of 34.00 from holding Xtrackers California Municipal or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers California Municipal vs. VanEck Short Muni
Performance |
| Timeline |
| Xtrackers California |
| VanEck Short Muni |
Xtrackers California and VanEck Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and VanEck Short
The main advantage of trading using opposite Xtrackers California and VanEck Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, VanEck Short 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 VanEck Short will offset losses from the drop in VanEck Short's long position.| Xtrackers California vs. SSGA Active Trust | Xtrackers California vs. SPDR Nuveen Municipal | Xtrackers California vs. iShares Short Maturity | Xtrackers California vs. First Trust Flexible |
| VanEck Short vs. SSGA Active Trust | VanEck Short vs. SPDR Nuveen Municipal | VanEck Short vs. Xtrackers California Municipal | VanEck Short vs. iShares Short Maturity |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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