Correlation Between VCRM and Xtrackers California
Can any of the company-specific risk be diversified away by investing in both VCRM and Xtrackers California 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 VCRM and Xtrackers California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VCRM and Xtrackers California Municipal, you can compare the effects of market volatilities on VCRM and Xtrackers California 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 VCRM with a short position of Xtrackers California. Check out your portfolio center. Please also check ongoing floating volatility patterns of VCRM and Xtrackers California.
Diversification Opportunities for VCRM and Xtrackers California
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VCRM and Xtrackers is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding VCRM and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California and VCRM 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 VCRM are associated (or correlated) with Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of VCRM i.e., VCRM and Xtrackers California go up and down completely randomly.
Pair Corralation between VCRM and Xtrackers California
Given the investment horizon of 90 days VCRM is expected to under-perform the Xtrackers California. But the etf apears to be less risky and, when comparing its historical volatility, VCRM is 1.22 times less risky than Xtrackers California. The etf trades about -0.17 of its potential returns per unit of risk. The Xtrackers California Municipal is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,466 in Xtrackers California Municipal on January 14, 2025 and sell it today you would lose (46.00) from holding Xtrackers California Municipal or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
VCRM vs. Xtrackers California Municipal
Performance |
| Timeline |
| VCRM |
| Xtrackers California |
VCRM and Xtrackers California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VCRM and Xtrackers California
The main advantage of trading using opposite VCRM and Xtrackers California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VCRM position performs unexpectedly, Xtrackers California 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 Xtrackers California will offset losses from the drop in Xtrackers California's long position.| VCRM vs. Xtrackers California Municipal | VCRM vs. IQ MacKay Municipal | VCRM vs. IQ MacKay Municipal | VCRM vs. ALPS Intermediate Municipal |
| Xtrackers California vs. VCRM | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. ALPS Intermediate 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |