Correlation Between Xtrackers California and VCRM
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and VCRM 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 VCRM 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 VCRM, you can compare the effects of market volatilities on Xtrackers California and VCRM 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 VCRM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and VCRM.
Diversification Opportunities for Xtrackers California and VCRM
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and VCRM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and VCRM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VCRM 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 VCRM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VCRM has no effect on the direction of Xtrackers California i.e., Xtrackers California and VCRM go up and down completely randomly.
Pair Corralation between Xtrackers California and VCRM
Allowing for the 90-day total investment horizon Xtrackers California is expected to generate 1.02 times less return on investment than VCRM. But when comparing it to its historical volatility, Xtrackers California Municipal is 1.04 times less risky than VCRM. It trades about 0.04 of its potential returns per unit of risk. VCRM is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,484 in VCRM on November 27, 2024 and sell it today you would earn a total of 40.00 from holding VCRM or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 20.81% |
| Values | Daily Returns |
Xtrackers California Municipal vs. VCRM
Performance |
| Timeline |
| Xtrackers California |
| VCRM |
Xtrackers California and VCRM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and VCRM
The main advantage of trading using opposite Xtrackers California and VCRM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, VCRM 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 VCRM will offset losses from the drop in VCRM's long position.| Xtrackers California vs. VanEck Vectors Moodys | Xtrackers California vs. Valued Advisers Trust | Xtrackers California vs. Principal Exchange Traded Funds | Xtrackers California vs. Vanguard ESG Corporate |
| VCRM vs. VanEck Vectors Moodys | VCRM vs. Valued Advisers Trust | VCRM vs. Xtrackers California Municipal | VCRM vs. Principal Exchange Traded Funds |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges |