Correlation Between VanEck Short and Xtrackers Municipal

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

By analyzing existing cross correlation between VanEck Short High and Xtrackers Municipal Infrastructure, you can compare the effects of market volatilities on VanEck Short and Xtrackers Municipal 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 Short with a short position of Xtrackers Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Short and Xtrackers Municipal.

Diversification Opportunities for VanEck Short and Xtrackers Municipal

0.74

Correlation Coefficient

VanEck Short  Xtrackers Municipal

Poor diversification

The 3 months correlation between VanEck and Xtrackers is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Short High and Xtrackers Municipal Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Municipal and VanEck Short 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 Short High are associated (or correlated) with Xtrackers Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Municipal has no effect on the direction of VanEck Short i.e., VanEck Short and Xtrackers Municipal go up and down completely randomly.

Pair Corralation between VanEck Short and Xtrackers Municipal

Given the investment horizon of 90 days VanEck Short High is expected to generate 0.77 times more return on investment than Xtrackers Municipal. However, VanEck Short High is 1.3 times less risky than Xtrackers Municipal. It trades about 0.03 of its potential returns per unit of risk. Xtrackers Municipal Infrastructure is currently generating about -0.09 per unit of risk. If you would invest  2,252  in VanEck Short High on October 9, 2024 and sell it today you would earn a total of  8.00  from holding VanEck Short High or generate 0.36% return on investment over 90 days.

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

VanEck Short High  vs.  Xtrackers Municipal Infrastruc

VanEck Short High

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Short High are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck Short is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Xtrackers Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers Municipal Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Xtrackers Municipal is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck Short and Xtrackers Municipal

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

The idea behind VanEck Short High and Xtrackers Municipal Infrastructure 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.