Correlation Between ETFis Series and VanEck Preferred

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

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

Diversification Opportunities for ETFis Series and VanEck Preferred

0.28

Correlation Coefficient

ETFis Series  VanEck Preferred

Modest diversification

The 3 months correlation between ETFis and VanEck is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ETFis Series Trust and VanEck Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Preferred Sec and ETFis Series 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 ETFis Series Trust are associated (or correlated) with VanEck Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Preferred Sec has no effect on the direction of ETFis Series i.e., ETFis Series and VanEck Preferred go up and down completely randomly.

Pair Corralation between ETFis Series and VanEck Preferred

Given the investment horizon of 90 days ETFis Series Trust is expected to generate 1.12 times more return on investment than VanEck Preferred. However, ETFis Series is 1.12 times more volatile than VanEck Preferred Securities. It trades about 0.03 of its potential returns per unit of risk. VanEck Preferred Securities is currently generating about 0.0 per unit of risk. If you would invest  1,833  in ETFis Series Trust on December 25, 2024 and sell it today you would earn a total of  16.00  from holding ETFis Series Trust or generate 0.87% return on investment over 90 days.

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

ETFis Series Trust  vs.  VanEck Preferred Securities

ETFis Series Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ETFis Series Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ETFis Series is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

VanEck Preferred Sec

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Preferred Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VanEck Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ETFis Series and VanEck Preferred

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

The idea behind ETFis Series Trust and VanEck Preferred Securities 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.