Correlation Between VanEck Preferred and AAM Low
Can any of the company-specific risk be diversified away by investing in both VanEck Preferred and AAM Low 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 Preferred and AAM Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Preferred Securities and AAM Low Duration, you can compare the effects of market volatilities on VanEck Preferred and AAM Low 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 Preferred with a short position of AAM Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Preferred and AAM Low.
Diversification Opportunities for VanEck Preferred and AAM Low
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and AAM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Preferred Securities and AAM Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAM Low Duration and VanEck Preferred 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 Preferred Securities are associated (or correlated) with AAM Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAM Low Duration has no effect on the direction of VanEck Preferred i.e., VanEck Preferred and AAM Low go up and down completely randomly.
Pair Corralation between VanEck Preferred and AAM Low
Given the investment horizon of 90 days VanEck Preferred Securities is expected to generate 1.9 times more return on investment than AAM Low. However, VanEck Preferred is 1.9 times more volatile than AAM Low Duration. It trades about -0.01 of its potential returns per unit of risk. AAM Low Duration is currently generating about -0.05 per unit of risk. If you would invest 1,808 in VanEck Preferred Securities on August 30, 2024 and sell it today you would lose (7.00) from holding VanEck Preferred Securities or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Preferred Securities vs. AAM Low Duration
Performance |
| Timeline |
| VanEck Preferred Sec |
| AAM Low Duration |
VanEck Preferred and AAM Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Preferred and AAM Low
The main advantage of trading using opposite VanEck Preferred and AAM Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Preferred position performs unexpectedly, AAM Low 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 AAM Low will offset losses from the drop in AAM Low's long position.| VanEck Preferred vs. Global X SuperIncome | VanEck Preferred vs. SPDR ICE Preferred | VanEck Preferred vs. Invesco Preferred ETF | VanEck Preferred vs. Invesco Variable Rate |
| AAM Low vs. Global X Variable | AAM Low vs. ETFis Series Trust | AAM Low vs. Innovator SP Investment | AAM Low vs. Principal Spectrum Preferred |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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