Correlation Between VanEck Inflation and Cabana Target

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

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

Diversification Opportunities for VanEck Inflation and Cabana Target

0.49

Correlation Coefficient

VanEck Inflation  Cabana Target

Very weak diversification

The 3 months correlation between VanEck and Cabana is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Inflation Allocation and Cabana Target Leading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Leading and VanEck Inflation 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 Inflation Allocation are associated (or correlated) with Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Leading has no effect on the direction of VanEck Inflation i.e., VanEck Inflation and Cabana Target go up and down completely randomly.

Pair Corralation between VanEck Inflation and Cabana Target

Given the investment horizon of 90 days VanEck Inflation Allocation is expected to generate 0.95 times more return on investment than Cabana Target. However, VanEck Inflation Allocation is 1.05 times less risky than Cabana Target. It trades about 0.05 of its potential returns per unit of risk. Cabana Target Leading is currently generating about 0.01 per unit of risk. If you would invest  2,905  in VanEck Inflation Allocation on October 25, 2024 and sell it today you would earn a total of  61.46  from holding VanEck Inflation Allocation or generate 2.12% return on investment over 90 days.

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

VanEck Inflation Allocation  vs.  Cabana Target Leading

VanEck Inflation All

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 3 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Cabana Target Leading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabana Target Leading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cabana Target is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VanEck Inflation and Cabana Target

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

The idea behind VanEck Inflation Allocation and Cabana Target Leading 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.