Correlation Between Overlay Shares and VanEck Long
Can any of the company-specific risk be diversified away by investing in both Overlay Shares and VanEck Long 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 Overlay Shares and VanEck Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overlay Shares Municipal and VanEck Long Muni, you can compare the effects of market volatilities on Overlay Shares and VanEck Long 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 Overlay Shares with a short position of VanEck Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overlay Shares and VanEck Long.
Diversification Opportunities for Overlay Shares and VanEck Long
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Overlay and VanEck is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Overlay Shares Municipal and VanEck Long Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Long Muni and Overlay Shares 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 Overlay Shares Municipal are associated (or correlated) with VanEck Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Long Muni has no effect on the direction of Overlay Shares i.e., Overlay Shares and VanEck Long go up and down completely randomly.
Pair Corralation between Overlay Shares and VanEck Long
Considering the 90-day investment horizon Overlay Shares Municipal is expected to generate 0.81 times more return on investment than VanEck Long. However, Overlay Shares Municipal is 1.23 times less risky than VanEck Long. It trades about 0.06 of its potential returns per unit of risk. VanEck Long Muni is currently generating about 0.03 per unit of risk. If you would invest 2,158 in Overlay Shares Municipal on August 27, 2024 and sell it today you would earn a total of 69.00 from holding Overlay Shares Municipal or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Overlay Shares Municipal vs. VanEck Long Muni
Performance |
| Timeline |
| Overlay Shares Municipal |
| VanEck Long Muni |
Overlay Shares and VanEck Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overlay Shares and VanEck Long
The main advantage of trading using opposite Overlay Shares and VanEck Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overlay Shares position performs unexpectedly, VanEck Long 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 Long will offset losses from the drop in VanEck Long's long position.| Overlay Shares vs. Franklin Liberty Intermediate | Overlay Shares vs. Hartford Municipal Opportunities | Overlay Shares vs. IQ MacKay Municipal |
| VanEck Long vs. Franklin Liberty Intermediate | VanEck Long vs. Hartford Municipal Opportunities | VanEck Long vs. IQ MacKay Municipal |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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