Correlation Between VanEck Preferred and IShares Broad

Can any of the company-specific risk be diversified away by investing in both VanEck Preferred and IShares Broad 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 IShares Broad 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 iShares Broad USD, you can compare the effects of market volatilities on VanEck Preferred and IShares Broad 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 IShares Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Preferred and IShares Broad.

Diversification Opportunities for VanEck Preferred and IShares Broad

0.04

Correlation Coefficient

VanEck Preferred  IShares Broad

Significant diversification

The 3 months correlation between VanEck and IShares is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Preferred Securities and iShares Broad USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broad USD 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 IShares Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broad USD has no effect on the direction of VanEck Preferred i.e., VanEck Preferred and IShares Broad go up and down completely randomly.

Pair Corralation between VanEck Preferred and IShares Broad

Given the investment horizon of 90 days VanEck Preferred is expected to generate 1.52 times less return on investment than IShares Broad. In addition to that, VanEck Preferred is 1.69 times more volatile than iShares Broad USD. It trades about 0.04 of its total potential returns per unit of risk. iShares Broad USD is currently generating about 0.1 per unit of volatility. If you would invest  3,098  in iShares Broad USD on October 21, 2024 and sell it today you would earn a total of  621.00  from holding iShares Broad USD or generate 20.05% return on investment over 90 days.

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

VanEck Preferred Securities  vs.  iShares Broad USD

VanEck Preferred Sec

Risk-Adjusted Performance

0 of 100

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.

iShares Broad USD

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Broad USD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, IShares Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Preferred and IShares Broad

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

The idea behind VanEck Preferred Securities and iShares Broad USD 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 CEOs Directory module to screen CEOs from public companies around the world.