Correlation Between VanEck Preferred and Global X

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

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

Diversification Opportunities for VanEck Preferred and Global X

0.72

Correlation Coefficient

VanEck Preferred  Global X

Poor diversification

The 3 months correlation between VanEck and Global is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Preferred Securities and Global X SuperIncome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperIncome and VanEck Preferred 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 Preferred Securities are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SuperIncome has no effect on the direction of VanEck Preferred i.e., VanEck Preferred and Global X go up and down completely randomly.

Pair Corralation between VanEck Preferred and Global X

Given the investment horizon of 90 days VanEck Preferred Securities is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Preferred Securities is 1.03 times less risky than Global X. The etf trades about -0.15 of its potential returns per unit of risk. The Global X SuperIncome is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  943.00  in Global X SuperIncome on November 28, 2024 and sell it today you would lose (11.50) from holding Global X SuperIncome or give up 1.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

VanEck Preferred Securities  vs.  Global X SuperIncome

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.

Global X SuperIncome

Risk-Adjusted Performance

Very Weak

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

Pair Trading with VanEck Preferred and Global X

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

The idea behind VanEck Preferred Securities and Global X SuperIncome 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.