Correlation Between Burney Factor and VanEck Green

Can any of the company-specific risk be diversified away by investing in both Burney Factor and VanEck Green 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 Burney Factor and VanEck Green into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Burney Factor Rotation and VanEck Green Infrastructure, you can compare the effects of market volatilities on Burney Factor and VanEck Green 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 Burney Factor with a short position of VanEck Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burney Factor and VanEck Green.

Diversification Opportunities for Burney Factor and VanEck Green

0.75

Correlation Coefficient

Burney Factor  VanEck Green

Poor diversification

The 3 months correlation between Burney and VanEck is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Burney Factor Rotation and VanEck Green Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Green Infrast and Burney Factor 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 Burney Factor Rotation are associated (or correlated) with VanEck Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Green Infrast has no effect on the direction of Burney Factor i.e., Burney Factor and VanEck Green go up and down completely randomly.

Pair Corralation between Burney Factor and VanEck Green

Given the investment horizon of 90 days Burney Factor Rotation is expected to generate 0.99 times more return on investment than VanEck Green. However, Burney Factor Rotation is 1.01 times less risky than VanEck Green. It trades about -0.06 of its potential returns per unit of risk. VanEck Green Infrastructure is currently generating about -0.09 per unit of risk. If you would invest  4,170  in Burney Factor Rotation on December 28, 2024 and sell it today you would lose (195.48) from holding Burney Factor Rotation or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Burney Factor Rotation  vs.  VanEck Green Infrastructure

Burney Factor Rotation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burney Factor Rotation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Burney Factor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

VanEck Green Infrast

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Green Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Burney Factor and VanEck Green

The main advantage of trading using opposite Burney Factor and VanEck Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burney Factor position performs unexpectedly, VanEck Green 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 Green will offset losses from the drop in VanEck Green's long position.

The idea behind Burney Factor Rotation and VanEck Green Infrastructure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.