Correlation Between VanEck High and VanEck Short
Can any of the company-specific risk be diversified away by investing in both VanEck High 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 VanEck High and VanEck Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck High Yield and VanEck Short High, you can compare the effects of market volatilities on VanEck High 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 VanEck High with a short position of VanEck Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck High and VanEck Short.
Diversification Opportunities for VanEck High and VanEck Short
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VanEck and VanEck is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding VanEck High Yield and VanEck Short High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Short High and VanEck High 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 VanEck High Yield 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 High has no effect on the direction of VanEck High i.e., VanEck High and VanEck Short go up and down completely randomly.
Pair Corralation between VanEck High and VanEck Short
Considering the 90-day investment horizon VanEck High Yield is expected to generate 1.52 times more return on investment than VanEck Short. However, VanEck High is 1.52 times more volatile than VanEck Short High. It trades about 0.13 of its potential returns per unit of risk. VanEck Short High is currently generating about 0.11 per unit of risk. If you would invest 5,198 in VanEck High Yield on August 29, 2024 and sell it today you would earn a total of 62.00 from holding VanEck High Yield or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck High Yield vs. VanEck Short High
Performance |
| Timeline |
| VanEck High Yield |
| VanEck Short High |
VanEck High and VanEck Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck High and VanEck Short
The main advantage of trading using opposite VanEck High and VanEck Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck High 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.| VanEck High vs. SPDR Nuveen Bloomberg | VanEck High vs. iShares National Muni | VanEck High vs. Invesco National AMT Free | VanEck High vs. VanEck Intermediate Muni |
| VanEck Short vs. SPDR Nuveen Bloomberg | VanEck Short vs. VanEck Short Muni | VanEck Short vs. VanEck Long Muni |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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