Correlation Between VanEck Preferred and Invesco Variable

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

Diversification Opportunities for VanEck Preferred and Invesco Variable

0.32

Correlation Coefficient

VanEck Preferred  Invesco Variable

Weak diversification

The 3 months correlation between VanEck and Invesco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Preferred Securities and Invesco Variable Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Variable Rate 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 Invesco Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Variable Rate has no effect on the direction of VanEck Preferred i.e., VanEck Preferred and Invesco Variable go up and down completely randomly.

Pair Corralation between VanEck Preferred and Invesco Variable

Given the investment horizon of 90 days VanEck Preferred Securities is expected to under-perform the Invesco Variable. In addition to that, VanEck Preferred is 1.76 times more volatile than Invesco Variable Rate. It trades about -0.02 of its total potential returns per unit of risk. Invesco Variable Rate is currently generating about 0.05 per unit of volatility. If you would invest  2,416  in Invesco Variable Rate on November 28, 2024 and sell it today you would earn a total of  21.00  from holding Invesco Variable Rate 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

VanEck Preferred Securities  vs.  Invesco Variable Rate

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.

Invesco Variable Rate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Variable Rate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Variable is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VanEck Preferred and Invesco Variable

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

The idea behind VanEck Preferred Securities and Invesco Variable Rate 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.