Correlation Between IShares National and VanEck High
Can any of the company-specific risk be diversified away by investing in both IShares National and VanEck High 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 IShares National and VanEck High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares National Muni and VanEck High Yield, you can compare the effects of market volatilities on IShares National and VanEck High 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 IShares National with a short position of VanEck High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares National and VanEck High.
Diversification Opportunities for IShares National and VanEck High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and VanEck is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares National Muni and VanEck High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck High Yield and IShares National 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 iShares National Muni are associated (or correlated) with VanEck High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck High Yield has no effect on the direction of IShares National i.e., IShares National and VanEck High go up and down completely randomly.
Pair Corralation between IShares National and VanEck High
Considering the 90-day investment horizon iShares National Muni is expected to generate 0.93 times more return on investment than VanEck High. However, iShares National Muni is 1.08 times less risky than VanEck High. It trades about 0.14 of its potential returns per unit of risk. VanEck High Yield is currently generating about 0.09 per unit of risk. If you would invest 10,682 in iShares National Muni on August 27, 2024 and sell it today you would earn a total of 119.00 from holding iShares National Muni or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares National Muni vs. VanEck High Yield
Performance |
| Timeline |
| iShares National Muni |
| VanEck High Yield |
IShares National and VanEck High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares National and VanEck High
The main advantage of trading using opposite IShares National and VanEck High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares National position performs unexpectedly, VanEck High 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 High will offset losses from the drop in VanEck High's long position.| IShares National vs. SSGA Active Trust | IShares National vs. SPDR MarketAxess Investment | IShares National vs. SSGA Active Trust |
| 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 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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