Correlation Between ETF Series and VanEck Preferred
Can any of the company-specific risk be diversified away by investing in both ETF Series and VanEck Preferred 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 ETF Series and VanEck Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and VanEck Preferred Securities, you can compare the effects of market volatilities on ETF Series and VanEck Preferred 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 ETF Series with a short position of VanEck Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and VanEck Preferred.
Diversification Opportunities for ETF Series and VanEck Preferred
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETF and VanEck is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and VanEck Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Preferred Sec and ETF Series 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 ETF Series Solutions are associated (or correlated) with VanEck Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Preferred Sec has no effect on the direction of ETF Series i.e., ETF Series and VanEck Preferred go up and down completely randomly.
Pair Corralation between ETF Series and VanEck Preferred
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 1.81 times more return on investment than VanEck Preferred. However, ETF Series is 1.81 times more volatile than VanEck Preferred Securities. It trades about 0.06 of its potential returns per unit of risk. VanEck Preferred Securities is currently generating about -0.02 per unit of risk. If you would invest 3,328 in ETF Series Solutions on August 29, 2024 and sell it today you would earn a total of 46.00 from holding ETF Series Solutions or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. VanEck Preferred Securities
Performance |
| Timeline |
| ETF Series Solutions |
| VanEck Preferred Sec |
ETF Series and VanEck Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and VanEck Preferred
The main advantage of trading using opposite ETF Series and VanEck Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series position performs unexpectedly, VanEck Preferred 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 Preferred will offset losses from the drop in VanEck Preferred's long position.| ETF Series vs. WisdomTree 9060 Balanced | ETF Series vs. RPAR Risk Parity | ETF Series vs. Cambria Tail Risk | ETF Series vs. Aptus Defined Risk |
| VanEck Preferred vs. ETF Series Solutions | VanEck Preferred vs. Aquagold International | VanEck Preferred vs. Morningstar Unconstrained Allocation | VanEck Preferred vs. High Yield Municipal Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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