Correlation Between VanEck CEF and Xtrackers Municipal
Can any of the company-specific risk be diversified away by investing in both VanEck CEF and Xtrackers Municipal 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 CEF and Xtrackers Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck CEF Municipal and Xtrackers Municipal Infrastructure, you can compare the effects of market volatilities on VanEck CEF and Xtrackers Municipal 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 CEF with a short position of Xtrackers Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck CEF and Xtrackers Municipal.
Diversification Opportunities for VanEck CEF and Xtrackers Municipal
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and Xtrackers is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding VanEck CEF Municipal and Xtrackers Municipal Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Municipal and VanEck CEF 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 CEF Municipal are associated (or correlated) with Xtrackers Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Municipal has no effect on the direction of VanEck CEF i.e., VanEck CEF and Xtrackers Municipal go up and down completely randomly.
Pair Corralation between VanEck CEF and Xtrackers Municipal
Given the investment horizon of 90 days VanEck CEF Municipal is expected to generate 1.03 times more return on investment than Xtrackers Municipal. However, VanEck CEF is 1.03 times more volatile than Xtrackers Municipal Infrastructure. It trades about 0.23 of its potential returns per unit of risk. Xtrackers Municipal Infrastructure is currently generating about 0.17 per unit of risk. If you would invest 2,208 in VanEck CEF Municipal on August 30, 2024 and sell it today you would earn a total of 68.00 from holding VanEck CEF Municipal or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck CEF Municipal vs. Xtrackers Municipal Infrastruc
Performance |
| Timeline |
| VanEck CEF Municipal |
| Xtrackers Municipal |
VanEck CEF and Xtrackers Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck CEF and Xtrackers Municipal
The main advantage of trading using opposite VanEck CEF and Xtrackers Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck CEF position performs unexpectedly, Xtrackers Municipal 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 Municipal will offset losses from the drop in Xtrackers Municipal's long position.| VanEck CEF vs. VanEck Long Muni | VanEck CEF vs. VanEck Short High | VanEck CEF vs. SPDR Nuveen Bloomberg | VanEck CEF vs. VanEck High Yield |
| Xtrackers Municipal vs. VanEck Long Muni | Xtrackers Municipal vs. VanEck Short High | Xtrackers Municipal vs. VanEck CEF Municipal | Xtrackers Municipal vs. PIMCO Short Term |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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