Correlation Between VanEck Short and VanEck CEF
Can any of the company-specific risk be diversified away by investing in both VanEck Short and VanEck CEF 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 Short and VanEck CEF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Short Muni and VanEck CEF Municipal, you can compare the effects of market volatilities on VanEck Short and VanEck CEF 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 Short with a short position of VanEck CEF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Short and VanEck CEF.
Diversification Opportunities for VanEck Short and VanEck CEF
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and VanEck is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Short Muni and VanEck CEF Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CEF Municipal and VanEck Short 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 Short Muni are associated (or correlated) with VanEck CEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CEF Municipal has no effect on the direction of VanEck Short i.e., VanEck Short and VanEck CEF go up and down completely randomly.
Pair Corralation between VanEck Short and VanEck CEF
Considering the 90-day investment horizon VanEck Short is expected to generate 2.14 times less return on investment than VanEck CEF. But when comparing it to its historical volatility, VanEck Short Muni is 4.34 times less risky than VanEck CEF. It trades about 0.06 of its potential returns per unit of risk. VanEck CEF Municipal is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,230 in VanEck CEF Municipal on August 29, 2024 and sell it today you would earn a total of 18.00 from holding VanEck CEF Municipal or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Short Muni vs. VanEck CEF Municipal
Performance |
| Timeline |
| VanEck Short Muni |
| VanEck CEF Municipal |
VanEck Short and VanEck CEF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Short and VanEck CEF
The main advantage of trading using opposite VanEck Short and VanEck CEF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Short position performs unexpectedly, VanEck CEF 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 CEF will offset losses from the drop in VanEck CEF's long position.| VanEck Short vs. SSGA Active Trust | VanEck Short vs. SPDR Nuveen Municipal | VanEck Short vs. Xtrackers California Municipal | VanEck Short vs. iShares Short Maturity |
| VanEck CEF vs. VanEck Long Muni | VanEck CEF vs. VanEck Short High | VanEck CEF vs. SPDR Nuveen Bloomberg | VanEck CEF vs. VanEck High Yield |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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