Correlation Between SPDR ICE and VanEck Preferred
Can any of the company-specific risk be diversified away by investing in both SPDR ICE 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 SPDR ICE and VanEck Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR ICE Preferred and VanEck Preferred Securities, you can compare the effects of market volatilities on SPDR ICE 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 SPDR ICE with a short position of VanEck Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR ICE and VanEck Preferred.
Diversification Opportunities for SPDR ICE and VanEck Preferred
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and VanEck is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPDR ICE Preferred 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 SPDR ICE 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 SPDR ICE Preferred 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 SPDR ICE i.e., SPDR ICE and VanEck Preferred go up and down completely randomly.
Pair Corralation between SPDR ICE and VanEck Preferred
Considering the 90-day investment horizon SPDR ICE Preferred is expected to under-perform the VanEck Preferred. In addition to that, SPDR ICE is 1.33 times more volatile than VanEck Preferred Securities. It trades about -0.02 of its total potential returns per unit of risk. VanEck Preferred Securities is currently generating about 0.02 per unit of volatility. If you would invest 1,737 in VanEck Preferred Securities on November 3, 2024 and sell it today you would earn a total of 5.00 from holding VanEck Preferred Securities or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR ICE Preferred vs. VanEck Preferred Securities
Performance |
| Timeline |
| SPDR ICE Preferred |
| VanEck Preferred Sec |
SPDR ICE and VanEck Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR ICE and VanEck Preferred
The main advantage of trading using opposite SPDR ICE and VanEck Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR ICE 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.| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
| VanEck Preferred vs. Global X SuperIncome | VanEck Preferred vs. SPDR ICE Preferred | VanEck Preferred vs. Invesco Preferred ETF | VanEck Preferred vs. Invesco Variable Rate |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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