Correlation Between VanEck Long and Xtrackers Municipal
Can any of the company-specific risk be diversified away by investing in both VanEck Long and Xtrackers Municipal 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 Xtrackers Municipal 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 Xtrackers Municipal Infrastructure, you can compare the effects of market volatilities on VanEck Long and Xtrackers Municipal 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 Xtrackers Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Long and Xtrackers Municipal.
Diversification Opportunities for VanEck Long and Xtrackers Municipal
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Xtrackers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Long Muni and Xtrackers Municipal Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers 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 Xtrackers Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Municipal has no effect on the direction of VanEck Long i.e., VanEck Long and Xtrackers Municipal go up and down completely randomly.
Pair Corralation between VanEck Long and Xtrackers Municipal
Considering the 90-day investment horizon VanEck Long Muni is expected to generate 0.71 times more return on investment than Xtrackers Municipal. However, VanEck Long Muni is 1.4 times less risky than Xtrackers Municipal. It trades about -0.05 of its potential returns per unit of risk. Xtrackers Municipal Infrastructure is currently generating about -0.06 per unit of risk. If you would invest 1,785 in VanEck Long Muni on November 3, 2024 and sell it today you would lose (7.00) from holding VanEck Long Muni or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Long Muni vs. Xtrackers Municipal Infrastruc
Performance |
| Timeline |
| VanEck Long Muni |
| Xtrackers Municipal |
VanEck Long and Xtrackers Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Long and Xtrackers Municipal
The main advantage of trading using opposite VanEck Long and Xtrackers Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Long position performs unexpectedly, Xtrackers Municipal 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 Xtrackers Municipal will offset losses from the drop in Xtrackers Municipal's 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 |
| Xtrackers Municipal vs. VanEck Long Muni | Xtrackers Municipal vs. VanEck Short High | Xtrackers Municipal vs. VanEck CEF Municipal | Xtrackers Municipal vs. PIMCO Short Term |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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