Correlation Between VanEck Preferred and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both VanEck Preferred and SPDR ICE 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 SPDR ICE 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 SPDR ICE Preferred, you can compare the effects of market volatilities on VanEck Preferred and SPDR ICE 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 SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Preferred and SPDR ICE.
Diversification Opportunities for VanEck Preferred and SPDR ICE
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Preferred Securities and SPDR ICE Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE Preferred 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 SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE Preferred has no effect on the direction of VanEck Preferred i.e., VanEck Preferred and SPDR ICE go up and down completely randomly.
Pair Corralation between VanEck Preferred and SPDR ICE
Given the investment horizon of 90 days VanEck Preferred Securities is expected to generate 0.87 times more return on investment than SPDR ICE. However, VanEck Preferred Securities is 1.15 times less risky than SPDR ICE. It trades about 0.0 of its potential returns per unit of risk. SPDR ICE Preferred is currently generating about -0.09 per unit of risk. If you would invest 1,803 in VanEck Preferred Securities on August 26, 2024 and sell it today you would lose (1.00) from holding VanEck Preferred Securities or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Preferred Securities vs. SPDR ICE Preferred
Performance |
| Timeline |
| VanEck Preferred Sec |
| SPDR ICE Preferred |
VanEck Preferred and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Preferred and SPDR ICE
The main advantage of trading using opposite VanEck Preferred and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Preferred position performs unexpectedly, SPDR ICE 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 SPDR ICE will offset losses from the drop in SPDR ICE's long position.| VanEck Preferred vs. ETF Series Solutions | VanEck Preferred vs. Aquagold International | VanEck Preferred vs. Morningstar Unconstrained Allocation | VanEck Preferred vs. High Yield Municipal Fund |
| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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