Correlation Between VanEck Long and Overlay Shares
Can any of the company-specific risk be diversified away by investing in both VanEck Long and Overlay Shares 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 Long and Overlay Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Long Muni and Overlay Shares Municipal, you can compare the effects of market volatilities on VanEck Long and Overlay Shares 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 Long with a short position of Overlay Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Long and Overlay Shares.
Diversification Opportunities for VanEck Long and Overlay Shares
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Overlay is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Long Muni and Overlay Shares Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overlay Shares Municipal and VanEck Long 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 Long Muni are associated (or correlated) with Overlay Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overlay Shares Municipal has no effect on the direction of VanEck Long i.e., VanEck Long and Overlay Shares go up and down completely randomly.
Pair Corralation between VanEck Long and Overlay Shares
Considering the 90-day investment horizon VanEck Long is expected to generate 1.32 times less return on investment than Overlay Shares. In addition to that, VanEck Long is 1.35 times more volatile than Overlay Shares Municipal. It trades about 0.04 of its total potential returns per unit of risk. Overlay Shares Municipal is currently generating about 0.06 per unit of volatility. If you would invest 2,004 in Overlay Shares Municipal on August 23, 2024 and sell it today you would earn a total of 215.00 from holding Overlay Shares Municipal or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Long Muni vs. Overlay Shares Municipal
Performance |
| Timeline |
| VanEck Long Muni |
| Overlay Shares Municipal |
VanEck Long and Overlay Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Long and Overlay Shares
The main advantage of trading using opposite VanEck Long and Overlay Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Long position performs unexpectedly, Overlay Shares 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 Overlay Shares will offset losses from the drop in Overlay Shares' long position.| VanEck Long vs. VanEck Intermediate Muni | VanEck Long vs. VanEck Short Muni | VanEck Long vs. Invesco National AMT Free | VanEck Long vs. SPDR Nuveen Bloomberg |
| Overlay Shares vs. Overlay Shares Core | Overlay Shares vs. Overlay Shares Large | Overlay Shares vs. Overlay Shares Foreign | Overlay Shares vs. OVS SpA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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