Correlation Between VanEck Inflation and STF Tactical

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

Diversification Opportunities for VanEck Inflation and STF Tactical

0.8

Correlation Coefficient

VanEck Inflation  STF Tactical

Very poor diversification

The 3 months correlation between VanEck and STF is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Inflation Allocation and STF Tactical Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STF Tactical Growth 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 STF Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STF Tactical Growth has no effect on the direction of VanEck Inflation i.e., VanEck Inflation and STF Tactical go up and down completely randomly.

Pair Corralation between VanEck Inflation and STF Tactical

Given the investment horizon of 90 days VanEck Inflation is expected to generate 1.49 times less return on investment than STF Tactical. But when comparing it to its historical volatility, VanEck Inflation Allocation is 1.36 times less risky than STF Tactical. It trades about 0.08 of its potential returns per unit of risk. STF Tactical Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,735  in STF Tactical Growth on September 12, 2024 and sell it today you would earn a total of  887.00  from holding STF Tactical Growth or generate 32.43% return on investment over 90 days.

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

VanEck Inflation Allocation  vs.  STF Tactical Growth

VanEck Inflation All

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 10 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

STF Tactical Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STF Tactical Growth are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, STF Tactical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Inflation and STF Tactical

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

The idea behind VanEck Inflation Allocation and STF Tactical Growth 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.