Correlation Between Collaborative Investment and VanEck Inflation

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

By analyzing existing cross correlation between Collaborative Investment Series and VanEck Inflation Allocation, you can compare the effects of market volatilities on Collaborative Investment and VanEck Inflation 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 Collaborative Investment with a short position of VanEck Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collaborative Investment and VanEck Inflation.

Diversification Opportunities for Collaborative Investment and VanEck Inflation

0.71

Correlation Coefficient

Collaborative Investment  VanEck Inflation

Poor diversification

The 3 months correlation between Collaborative and VanEck is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Collaborative Investment Serie and VanEck Inflation Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Inflation All and Collaborative Investment 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 Collaborative Investment Series are associated (or correlated) with VanEck Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Inflation All has no effect on the direction of Collaborative Investment i.e., Collaborative Investment and VanEck Inflation go up and down completely randomly.

Pair Corralation between Collaborative Investment and VanEck Inflation

Given the investment horizon of 90 days Collaborative Investment is expected to generate 2.65 times less return on investment than VanEck Inflation. But when comparing it to its historical volatility, Collaborative Investment Series is 3.08 times less risky than VanEck Inflation. It trades about 0.15 of its potential returns per unit of risk. VanEck Inflation Allocation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,810  in VanEck Inflation Allocation on September 12, 2024 and sell it today you would earn a total of  148.00  from holding VanEck Inflation Allocation or generate 5.27% return on investment over 90 days.

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

Collaborative Investment Serie  vs.  VanEck Inflation Allocation

Collaborative Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Collaborative Investment Series are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Collaborative Investment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

VanEck Inflation All

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, VanEck Inflation is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Collaborative Investment and VanEck Inflation

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

The idea behind Collaborative Investment Series and VanEck Inflation Allocation 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.